• COVID-19 Update—IRS Guidance on Social Security Payroll Tax Delay
• New Investments White Paper: 30 Years of Positive Social Purpose Lending
• Paychex—Payroll-Processing and Tax-Compliance Solutions
• Wespath Holiday Closing—Labor Day

COVID-19 Update—IRS Guidance on Social Security Payroll Tax Delay

The Secretary of the Treasury (Secretary) has authority in the case of certain disasters (such as the one that has been declared for the COVID-19 pandemic crisis) to postpone certain due dates under the Tax Code.

On August 8, 2020, President Donald Trump prepared a memorandum directing the Secretary of the Treasury to use this authority to defer due dates under the Tax Code to provide "temporary relief … to support working Americans." This was described in the August 20 On Board Express.

Specifically, the President directed the Secretary to defer the dates for payment of the employee portion of Social Security payroll taxes¹ for the period September 1, 2020 to December 31, 2020, at least for employees making less than $4,000 in wages or compensation every two weeks. These taxes are normally paid by means of employers withholding and depositing with the Internal Revenue Service (IRS) the amount of such taxes (6.2% of wages or compensation). The President directed the Secretary to issue guidance to explain how this would work.

IRS Guidance

On August 28, 2020, the IRS issued guidance (Notice 2020-65) deferring the due date for employers to withhold and deposit these employee payroll taxes. If an employer decides to take advantage of this deferral, it could delay what the employer would withhold from an employee's pay in the period from September 1 to December 31, 2020 until the January 1 to April 30, 2021 period instead. Essentially, this delay of withholding in 2020 would double up on the employee's withholding in the first four months of 2021 (i.e., paying normal withholdings for January-April 2021 plus the delayed withholdings from September-December 2020).

Other things being equal, this would mean employees' take-home pay would be increased for the last four months of 2020 and then decreased for the first four months of 2021. This could lead to a fairly dramatic reduction in take-home pay at the start of 2021, equal to 12.4% of the individual's gross pay. Normal payroll tax withholding would resume as of May 1, 2021.

Outstanding Considerations

The U.S. Chamber of Commerce, on behalf of a number of businesses, has published a criticism of this proposal, saying it would do more harm than good to subject employees to such a swing in income, where these taxes are postponed for four months and then doubled for the next four months.

Only Congress has authority to eliminate taxes. Thus, if Congress were to eliminate the taxes the President wants to postpone, that would eliminate the swing in take-home pay that the President's order would otherwise impose. However, it is not known whether Congress will do this. (For example, one impact of forgiving the taxes that Congress would likely consider is the hastening of the date when the Social Security trust fund will run out of money.)

There are many outstanding questions related to this proposal; for example:

• Whether the deferral would help employees?
• For employers who are willing to participate in the program: how could they collect the tax if an employee leaves the employer at the end of 2020 (or before the deferred tax is repaid)?
• Would state wage laws setting a minimum wage be violated if collection of the deferred tax would bring an employee under the minimum?

Thus, many businesses have announced that they likely will not take advantage of the deferral and will simply continue to withhold and deposit Social Security taxes as usual.

We continue to monitor legislative activities and will bring you updates as available.

¹ While payroll taxes include the Social Security tax (Old Age, Survivors and Disability Insurance) of 6.2% and the Medicare tax of 1.45% of wages, the President's Memorandum and IRS Notice 2020-65 defer only the due date of the 6.2% Social Security tax.

New Investments White Paper: 30 Years of Positive Social Purpose Lending

In celebration of our PSP Lending Program's 30-year anniversary, PSP Director Sylvia Poniecki wrote a reflective white paper detailing how PSP seeks to deliver market-rate returns while supporting affordable housing and positive community impact around the world.

Paychex—Payroll-Processing and Tax-Compliance Solutions

Since June 2018, Wespath has partnered with Paychex to help provide an option for our plan sponsors who might be looking to move payroll-processing and tax-compliance solutions to an outside vendor. Paychex has more than 45 years of experience, and currently serves more than 1,000 United Methodist Church ministries. The company has expertise managing withholdings, payroll via direct deposit or check, tax compliance, and timely deposits and filings, in addition to providing custom reports for financial review and facilitating UMPIP contributions. Plus, UMC organizations receive a discount of 35% on Paychex services!

Usually Paychex has an opportunity to speak with you during conference meetings and events. This year, many of those events have been cancelled due to the challenges of meeting in person during the pandemic. Paychex invites you to instead visit their virtual booth to learn more about the services they offer.

Click here to view a video featuring Jeff Kohl, the head of the partnership with Wespath, explaining what services are available from Paychex.

How to Get Started Saving 35% on Paychex Services

• Online—go to https://pages.paychex.com/wespath and fill out the contact form.
• By phone—Call the UMC's Account Supervisor, Jeff Kohl, at 1-800-313-0767 and provide code 5704 for a 35% discount.

If your organization is already using Paychex but has not completed a benefits integration with Wespath, complete and return the Addendum.

Wespath Holiday Closing—Labor Day

Wespath will be closed on Monday, September 7, in observance of Labor Day. Customer Service assistance will be unavailable that day.

Benefits Access for participants can be used to access account information and complete transactions 24 hours a day, seven days a week. The automated phone system, accessible by calling 1-800-851-2201, will also be available for participants.

The Benefits Access Portal for Plan Sponsors and Wespath Institutional Investor Portal will be available to plan sponsors, conferences and institutions.

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