They can’t opt out of the payroll tax deferral and will have to pay the money back in 2021.
This month, more than a million active-duty military personnel and federal workers may see a bump in their paycheck, but next year that extra money will come due.
Against the wishes of both Democrats and Republicans in Congress, President Donald Trump deferred the 6.2% payroll tax for federal employees and service members. The president doesn’t have the power to permanently end the tax, meaning people who get that money in their paycheck now will just have to pay more next year, when Trump’s executive order expires. Full repayment is expected between Jan. 1 and April 30, penalties for late payments begins after that.
This deferral of Social Security taxes affects 1.3 million enlisted members and hundreds of thousands of civilian employees earning less than $8,666.66 a month–about 60% of the federal workforce. Service members and civilian military employees can’t opt out of the deferral.
“All active-duty military members as well as federal civilian employees will be subject to the president’s upcoming payroll tax deferral,” a White House official told Federal News Network.
Unlike federal agencies, private sector employers have the option of implementing the payroll tax deferral or not–and most have chosen the latter. The initiative began Sept. 1, but few have publicly announced that they will participate in the program. The prospects of altering payroll processes in the middle of the year, collecting higher taxes from employees in the first four months of 2021, and being responsible for repaying the taxes owed even if employees quit or are laid off before April 30 has left many employers with cold feet.
While the government can’t compel private companies to sign on for the program, it has far more control over federal agencies. Everett B. Kelley, national president of the American Federation of Government Employees–the largest union for federal workers–sent a letter to the Office of Management and Budget, urging the administration to give federal workers the choice to opt out. Union members are “strongly opposed” to the idea, he contended.
“Federal employees should not be forced to become involuntary debtors subject to interest and penalties as this OASDI tax deferral scheme apparently contemplates,” Kelley wrote. It “has the makings of a fiasco for employees, employers and the IRS. Federal workers will save nothing in taxes, and in the worst case, may even be subject to penalty payments and interest.”
Kelley also raised concerns that the “tax deferral scheme,” as he repeatedly called it, could be a pilot experiment in defunding Social Security.
“While a relatively short term tax deferral may seem harmless, it appears to be precursor to a larger initiative to permanently suspend or reduce OASDI taxes, a move that could cripple the long-term financial viability of the Social Security program,” he wrote.
Officials have not yet announced how much extra tax will be assessed per paycheck come January, but if the same schedule is followed as during the deferrals through December, military service members and federal employees will be paying back the same amount they were supplemented per pay period.
“The Trump administration’s plan to initiate payroll tax deferrals for civil servants treats the federal workforce as a guinea pig for a bad policy that businesses already rejected as ‘unworkable,’” said Representative Don Beyer (D-Va.), whose constituents comprise the largest number of federal employees of any US representative.
“This payroll tax deferral does not really put money in workers’ pockets, it simply sets up the members of the federal workforce who can least afford it for a big tax bill that many will not expect.”
Stay safe, Puerto Rico: The governor issues a state of emergency due to heavy rains, flooding
The executive order also authorizes the activation of the National Guard to assist in relief efforts. The Guard will be tasked with providing...
Jennifer López and Bad Bunny steal the spotlight at Met Gala 2024
The artists were co-chairs of the event, alongside Zendaya and Chris Hemsworth. Rauw Alejandro also attended. Puerto Rican artists Jennifer López...
New report reveals cause of 2020 Arecibo Observatory collapse
The Committee's findings indicate that, although the fasteners had held up for decades, external forces like hurricanes exacerbated the issue. Four...
Florida’s iconic Key deer face an uncertain future as seas rise
BIG PINE KEY, Fla. (AP) — The world's only Key deer, the smallest subspecies of the white-tailed deer, are found in piney and marshy wetlands...