Bipartisan group of lawmakers: Feds are ‘pawns’ in tax deferral plan

While some federal employees may be looking forward to larger paychecks in coming weeks, others are not, and more than 20 senators are asking that the mandatory payroll tax deferral be optional.

“We urge you to let federal workers and uniformed service members choose whether to defer their payroll tax obligations under IRS Notice 2020-65, rather than forcing them to participate,” the group of more than two dozen lawmakers wrote in a letter to Treasury Secretary Steven Mnuchin and Office of Management and Budget Director Russell Vought.

The order—which will go into effect with federal employees’ second September paycheck—also requires the deferred taxes to be repaid starting in January. Most businesses have declined to implement the plan.

“Federal workers and service members should not be used as pawns for a payroll tax scheme that many private sector employers are unlikely to join and where key questions remain unanswered,” the letter continued.

Among their concerns is who would be liable for the unpaid payroll taxes in the event an employee separates from their agency before they are to be repaid; how will agencies communicate important information regarding the reduction in take-home pay in 2021; and they are also requesting cost estimates for the plan.

The deferral begins on or around September 18. Lawmakers are asking for an immediate response to their request and questions.

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Reader comments

Thu, Sep 17, 2020

What a bunch of BS. Once again federal workers are used. Vote this idiot out in November.

Thu, Sep 10, 2020 Virginia

I am a civilian in the DoD. We received an email yesterday saying that payroll (OASDI) tax is being deferred from Sep. - Dec. of 2020. Opt-out options for deferral are not available, as this action is automated. I strongly disapprove of this action. I don't want to owe the IRS taxes later. It would be less stressful for me to pay it now. It's like a pointless fixed short term loan, because I still have to pay it back on each paycheck in Jan.- April of 2021. I really hate that I don't have a choice in opting out of this. This was done for the sake of providing covid-19 relief but it's just creating the illusion of more money in my pocket. This isn't my money, it's tax money I owe to the government. All this action does is force me to hold onto the money I owe until the government decides to collect it in Jan-April of 2021.I don't want to defer paying payroll tax.

Thu, Sep 10, 2020

I will just send additional payments to the IRS. Problem solved.

Wed, Sep 9, 2020

I think this is a nice thing Trump is trying to do but he does need to make it optional. I personally have saved enough money on my own that I am not having troubles due to Covid and would definitely like to opt out if possible.

Wed, Sep 9, 2020

I do not want my taxes deferred from my retirement! Why is the Trump administration out to destroy the federal workforce? VOTE! VOTE! VOTE!

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