IRS employees have been getting “incomplete and conflicting” information about how President Trump’s payroll tax deferral plan will affect their paychecks, according to the leader of the agency’s biggest union.
“As the largest employer in the country, the federal government is failing in its responsibilities to its workforce by not adequately informing federal employees and explaining the implications and consequences of the payroll tax deferral,” National Treasury Employees Union President Tony Reardon said in a September 2 letter to Office of Management and Budget Director Russell Vought.
Trump’s August 8 executive memorandum directing Treasury to defer collection of the employee share of payroll taxes through the end of 2020 has drawn scrutiny and criticism from lawmakers, and it has been panned by private sector employers as unworkable. The White House said all federal agencies are expected to defer payroll taxes under the order, which took effect September 1.
House Ways and Means Committee ranking member Kevin Brady, R-Texas, said September 2 that he would soon introduce a bill that would allow the federal government to absorb the uncollected payroll taxes. House Democrats expressed opposition to payroll tax forgiveness in an August 21 letter to the president.
Meanwhile, Senate Minority Leader Charles E. Schumer, D-N.Y., and Finance Committee ranking member Ron Wyden, D-Ore., said September 2 that they hope to overturn Trump’s deferral plan using the Congressional Review Act.
Repayment Plans
Federal employees earning less than $104,000 a year will stop paying 6.2 percent of their wage income toward Social Security through the end of the year but will be expected to repay those taxes in 2021 unless Congress passes a law to forgive them, said Reardon, whose union represents about 150,000 employees at 33 federal agencies and departments, including the IRS.
The NTEU asked Vought to confirm whether the deferral has begun for federal employees in the current pay period that began August 30, which would affect their next paycheck around September 18.
“If that is accurate, federal employees deserve to be informed of that immediately,” Reardon said.
Reardon’s letter to Vought noted that a federal employee earning $70,000 a year — $2,963 per pay period, which is less than the $3,999 biweekly deferral limit under the order — would get an extra $167 in their 2020 paychecks but then would have to pay back about $1,500 by May 1, 2021.
Reardon asked the OMB director if federal employees will be able to opt out of the deferral.
The letter also asked how the employees’ 2021 repayment would take place — over time or in a lump sum — and whether workers would have a choice of how to repay the deferred taxes.