Employee Payroll Tax Deferral Memo - 9.1.2020
Finance Department
215 E. McKinney St., Denton, TX 76201 (940) 349-8531
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MEMORANDUM
DATE: September 2, 2020
TO: City of Denton Employees
FROM: Cassey Ogden, Director of Finance
SUBJECT: Payroll Tax Deferral
On August 8, 2020, President Trump signed an executive order providing a deferral (or
postponing payment) on certain payroll taxes due to the ongoing COVID-19 pandemic. The
order states the deferral will be effective from September 1, 2020 through December 31, 2020.
On Friday, August 28, 2020 the Treasury Department released guidance for taxpayers on the
Presidential payroll tax deferral executive order. Interpretation of this guidance is that the
deferral is voluntary, and the City of Denton has the option of deciding whether to withhold
taxes during the deferral period.
The City of Denton has decided to not participate in the executive order payroll tax deferral and
will continue to withhold payroll taxes and deposit withholdings on the behalf of all employees.
Below are reasons the City as decided to not participate in the payroll tax deferral program:
1) The City payroll system, the related tax tables in the system background, and the
employee pay stub and W-2 reporting system (Ceridian) would all require major
updates to adequately process, calculate, track, and report the payroll tax deferral
for employees.
2) Repayment of all deferred taxes will be required January 1, 2021 – April 30, 2021 to
avoid penalty and interest. This is a deferral, not a tax forgiveness.
3) Employees with deferrals would be subject to at least a doubled tax withholding
beginning January 2021; as the 6.2% social security tax would be reinstated, and the
deferred tax would be required to be paid back thru payroll deduction. Creating
substantial tax liability for the City of Denton and the employees. If the employee has
fluctuations in overtime, this will affect the repayment amounts.
4) Employees leaving employment with the City of Denton, would be required to repay
tax deferments in-full at time of termination.
5) Majority of employee feedback has been to opt out of the payroll tax deferral.
For questions, please contact Payroll at payroll@cityofdenton.com.