The U.S. Chamber of Commerce has submitted a coalition letter to House Speaker Pelosi, Senate Majority Leader McConnell, and Treasury Secretary Mnuchin regarding concerns with President Trump’s recent memorandum deferring payroll tax obligations.

On August 8, 2020, President Trump signed a memorandum that defers the obligations of employers for the employee’s portion of Social Security tax for many employees from September 1, 2020 through December 31, 2020. The memorandum orders Secretary Mnuchin to provide implementation guidance for the deferral and is intended to provide additional economic relief in response to the coronavirus (COVID-19) pandemic.

However, there are questions regarding the payroll tax deferral. Specifically, if an employer defers the employee’s portion of Social Security tax for the time period indicated, will employees need to repay those taxes in 2021?

The Chamber of Commerce’s letter explains that under the current law, the memorandum will create “a substantial tax liability for employees at the end of the deferral period.” The letter notes that: “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.”

A suspension of the employee’s portion of Social Security tax, so that employees would not need to repay the tax at a later date, “would be less challenging,” the letter adds.

The letter continues by saying many of its members see the temporary deferral as unfair to employees and furthermore “unworkable” regarding putting a system in place for employees to make such a decision.

The letter concludes by saying many of its members will likely decline to implement the payroll tax deferral and will instead continue to withhold and remit the employee’s portion of Social Security tax as required by law.

In addition to the U.S. Chamber of Commerce, the letter was signed by several businesses and associations.

At this point, the Treasury has not issued any guidance on the payroll tax deferral memorandum.