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EPY: Memorandum on Deferring Payroll Tax Obligations (Doc ID 2702245.1)

Last updated on SEPTEMBER 08, 2020

Applies to:

PeopleSoft Enterprise HCM Payroll for North America
Information in this document applies to any platform.

Details

On August 8, 2020, President Trump issued a memorandum to the Secretary of the Treasury regarding Deferring Payroll Tax Obligations in Light of COVID-19 Disaster

Section 2 of the memorandum detailed specific items regarding the withholding, deposit, and payment of the employee portion of the OASDI payroll tax.  

(a) The deferral shall be made available with respect to any employee the amount of whose wages or compensation, as applicable, payable during any bi-weekly pay period generally is less than $4,000, calculated on a pre-tax basis, or the equivalent amount with respect to other pay periods.

(b) Amounts deferred pursuant to the implementation of this memorandum shall be deferred without any penalties, interest, additional amount, or addition to the tax.

While we are currently awaiting instructions from the IRS clarifying the implementation of this Executive Order, we understand customer concerns about our plans. If implemented, we expect changes to COBOL tax calculations, online administrative changes, and possibly modifications to year-end processes.

Payroll industry organizations, including the American Payroll Association (APA) and the National Payroll Reporting Consortium (NPRC), have expressed concerns about the tax deferral.  PeopleSoft shares those concerns and will not post any updates until we have clarification on multiple items.  Please bookmark this document for future reference.  We will update as we receive more information.

UPDATE: On Friday, August 28, the IRS released Notice 2020-65 outlining their guidance on the Presidential Memorandum.

https://www.irs.gov/pub/irs-drop/n-20-65.pdf

 

 

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The American Payroll Association (APA) and the National Payroll Reporting Consortium (NPRC) have submitted comments on the President’s recent Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster. The letter contains six employer issues for which guidance has been requested:

 

UPDATE September 2, 2020: 

Oracle PeopleSoft Payroll for North America will be delivering a solution for the Presidential Memorandum on Deferring Payroll Tax Obligations with Tax Update 20-D/PI36, targeted for posting on October 16, 2020. We are tracking this solution on Base Bug 31832268.

Oracle PeopleSoft Payroll for North America plans to deliver new functionality to calculate and track the deferred employee portion of the Social Security taxes on wages and tips using two new tax classes. The deferred tax amounts will not be withheld from the employees’ wages. The deferred tax amounts will be printed on the employee check and advice wage statements (printed and self-service) as negative tax amounts so the employee can see that the employee portion of the Social Security tax was not withheld from their check. Customers will have the flexibility to identify which employees are qualified for the deferral. The solution will deliver a report that will assist customers in determining whether these employees have taxable wages within a pay period that are less than the prescribed threshold amounts.

 

We'd like to hear from our customers on this issue.  Please provide feedback on our community discussion thread here: https://community.oracle.com/thread/4344420

 

 

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