WASHINGTON — A debate between the White House and the Treasury Department over President Trump’s payroll tax suspension has delayed crucial information about how the executive order will be carried out, according to people familiar with the matter, leaving businesses across the country uncertain about how to proceed.
The delay in releasing guidelines about the tax suspension comes amid broad business backlash to the idea, which was announced by Mr. Trump this month after talks with Congress over another economic relief bill stalled. The executive order aims to stimulate the economy by allowing companies to stop withholding payroll taxes until the end of the year, putting more money in workers’ pockets.
But companies and trade groups have called the suspension an unnecessary complication since employees will be on the hook to pay the deferred taxes back when the tax holiday ends. Many companies are expected to opt out of participating to avoid sticking their employees with a giant tax bill next year.
The White House, which is eager to push through a tax cut before the November election, wants the Treasury guidance to ensure that companies, not workers, are held liable for paying the employee portion of the tax when the tax holiday ends.
It is unclear why the Treasury Department has not been willing to issue such guidance, but businesses, which have been fielding questions from their employees about when the tax cuts will begin, would prefer that Congress legislate any changes to tax policy. It is also not clear that the White House would have the legal authority to shift the tax burden in such a manner.
Last week, the U.S. Chamber of Commerce joined more than 30 industry groups to express opposition to the executive order in a letter to the Treasury Department and Congress.
“Under current law, the E.O. creates a substantial tax liability for employees at the end of the deferral period,” they wrote. “Without congressional action to forgive this liability, it threatens to impose serious hardships on employees who will face a large tax bill as a result of deferral.”
The Chamber of Commerce did not respond to a request for comment on the possibility that the tax liability could be hoisted on companies.
The dispute between the White House and the Treasury Department over the guidance was reported earlier by Bloomberg News. A department spokeswoman declined to comment. Judd Deere, a White House spokesman, did not dispute that the Trump administration wanted companies to be liable for the tax but said he would not comment on internal policy deliberations.
“The administration is fully committed to implementing the president’s order to provide much-needed relief to hardworking Americans,” Mr. Deere said.
Announced with great fanfare, Mr. Trump’s executive actions could end up offering limited fiscal relief to Americans still struggling to cope with the coronavirus pandemic. The president’s other move, to provide additional unemployment insurance payments of $300 to $400, had been adopted by only 32 states as of Tuesday, and the money might not be available for several weeks.
The payroll tax suspension plan has been fraught from the beginning.
Treasury Secretary Steven Mnuchin was skeptical of the idea and has said participation would be optional. Larry Kudlow, the director of the National Economic Council, has been one of its chief proponents. He suggested last week that repayment of the deferred taxes could be stretched out over a long period so that workers are not faced with a steep tax bill early next year.
Mr. Trump has said that he will push Congress to make the tax deferral permanent if he is re-elected, but if Democrats retain control of the House of Representatives, more tax cuts are unlikely.
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Frequently Asked Questions
Updated August 27, 2020
What should I consider when choosing a mask?
- There are a few basic things to consider. Does it have at least two layers? Good. If you hold it up to the light, can you see through it? Bad. Can you blow a candle out through your mask? Bad. Do you feel mostly OK wearing it for hours at a time? Good. The most important thing, after finding a mask that fits well without gapping, is to find a mask that you will wear. Spend some time picking out your mask, and find something that works with your personal style. You should be wearing it whenever you’re out in public for the foreseeable future. Read more: What’s the Best Material for a Mask?
What are the symptoms of coronavirus?
- In the beginning, the coronavirus seemed like it was primarily a respiratory illness — many patients had fever and chills, were weak and tired, and coughed a lot, though some people don’t show many symptoms at all. Those who seemed sickest had pneumonia or acute respiratory distress syndrome and received supplemental oxygen. By now, doctors have identified many more symptoms and syndromes. In April, the C.D.C. added to the list of early signs sore throat, fever, chills and muscle aches. Gastrointestinal upset, such as diarrhea and nausea, has also been observed. Another telltale sign of infection may be a sudden, profound diminution of one’s sense of smell and taste. Teenagers and young adults in some cases have developed painful red and purple lesions on their fingers and toes — nicknamed “Covid toe” — but few other serious symptoms.
Why does standing six feet away from others help?
- The coronavirus spreads primarily through droplets from your mouth and nose, especially when you cough or sneeze. The C.D.C., one of the organizations using that measure, bases its recommendation of six feet on the idea that most large droplets that people expel when they cough or sneeze will fall to the ground within six feet. But six feet has never been a magic number that guarantees complete protection. Sneezes, for instance, can launch droplets a lot farther than six feet, according to a recent study. It’s a rule of thumb: You should be safest standing six feet apart outside, especially when it’s windy. But keep a mask on at all times, even when you think you’re far enough apart.
I have antibodies. Am I now immune?
- As of right now, that seems likely, for at least several months. There have been frightening accounts of people suffering what seems to be a second bout of Covid-19. But experts say these patients may have a drawn-out course of infection, with the virus taking a slow toll weeks to months after initial exposure. People infected with the coronavirus typically produce immune molecules called antibodies, which are protective proteins made in response to an infection. These antibodies may last in the body only two to three months, which may seem worrisome, but that’s perfectly normal after an acute infection subsides, said Dr. Michael Mina, an immunologist at Harvard University. It may be possible to get the coronavirus again, but it’s highly unlikely that it would be possible in a short window of time from initial infection or make people sicker the second time.
I’m a small-business owner. Can I get relief?
- The stimulus bills enacted in March offer help for the millions of American small businesses. Those eligible for aid are businesses and nonprofit organizations with fewer than 500 workers, including sole proprietorships, independent contractors and freelancers. Some larger companies in some industries are also eligible. The help being offered, which is being managed by the Small Business Administration, includes the Paycheck Protection Program and the Economic Injury Disaster Loan program. But lots of folks have not yet seen payouts. Even those who have received help are confused: The rules are draconian, and some are stuck sitting on money they don’t know how to use. Many small-business owners are getting less than they expected or not hearing anything at all.
What are my rights if I am worried about going back to work?
Henrietta Treyz, the director of economic policy at the investment firm Veda Partners, said companies were also concerned that if they did not withhold taxes from their workers and those workers left their jobs before the end of the year, then they would be responsible for making the payments. Deferring the tax is also a problem for lawmakers, she noted, because the 6.2 percent tax funds Social Security.
“Politically this is potentially problematic for Republicans because the payroll tax funds Social Security — a program President Trump has promised repeatedly not to cut and which Democrats immediately seized upon as a campaign talking point,” Ms. Treyz wrote in a note to clients this week.
Mr. Mnuchin has insisted that deferring the payments will not threaten America’s social safety net programs.
However, permanently repealing the payroll tax, which Mr. Trump has repeatedly insisted that he wants to do, would. This week Stephen C. Goss, the chief actuary at the Social Security Administration, wrote in a letter to lawmakers that making the payroll tax cut permanent would deplete the trust fund used to pay for Social Security by the middle of 2023.