Federal Payroll Tax Relief Update: Heartland AEA Has Chosen Not to Participate

As you may be aware, on Aug. 8, 2020, President Trump signed an executive order to provide temporary relief from the collection of Social Security taxes for many employees. The relief would apply: 

• to salaries and wages earned from Sept. 1, 2020, to Dec. 31, 2020, and 
• to employees earning up to $104,000/year. The employee’s share of Social Security taxes is 6.2%, and the tax rate is applied to your taxable wages. 

Significantly, the payroll tax relief would be a delay or deferral of the tax unless the U.S. Congress votes to forgive the taxes. Without congressional action, employers would be required to double an employee’s Social Security tax withholding from January to April to recoup the unpaid amount. 

Heartland AEA Has Chosen Not to Participate

Employers were not mandated to participate in this tax deferral, and Heartland AEA has chosen not to participate. The primary factors in our decision: 

1. The tax relief is temporary. While an employee’s take-home pay would increase from September-December, it's very possible that Social Security tax withholdings would double from January-April to collect the unpaid taxes. 
2. The tax holiday was intended to help staff who were harmed by the economic downturn from COVID-19. Families of some of our employees may have been negatively impacted, but our staff received full pay during the last several months of the economic downturn. 
3. Our financial software is not set up to discontinue withholding of the employee share of Social Security tax for a few months, and then to double the tax withholding for the following four months. 

If you have any questions, contact Kurt Subra, Chief Financial Officer.