CalHR Director Eraina Ortega has announced the Administration will not implement a deferral of the withholding and payment of the employee's portion of the Social Security payroll taxes. This means payroll taxes will continue to be withheld from all state employee paychecks.
The federal policy allows the deferral of payroll taxes from September 1 through December 31, 2020, but the employee taxes are still owed and would be recovered from employees by April 30, 2021. To avoid a double withholding for state employees in 2021 to recover the taxes due, the Administration has declined to participate in the deferral program.
Director Ortega's September 2, 2020 message states:
"On August 8, 2020, President Trump issued a Presidential Memorandum directing the IRS to allow the deferral of withholding, deposit, and payment of payroll tax obligations for certain employees effective September 1, 2020. IRS guidance provided on August 28, 2020, clarifies employers can, but are not required to, participate in this program. After evaluation and consideration of the IRS guidance, the Administration is concerned that while the employer withholding obligation would be deferred in 2020, employees would experience a double withholding in 2021 to recover the taxes due. Further, if an employee separates from state service before the deferred tax was collected, the state may be required to pay the tax from state funds. For these reasons, the Administration has determined the program will not be implemented for State of California employees."
Please contact your ACSS Labor Relations Representative with any issues or concerns regarding this matter.