Senate Democrats Introduce Bill to Make Payroll Tax Deferral Optional

chuckstock/Shutterstock.com

Legislation requiring workers, including federal employees and military service members, to consent in writing to have their Social Security taxes deferred between now and the end of the year has the support of nearly 20 employee groups.

A group of 17 Senate Democrats have introduced legislation that would make President Trump’s controversial proposal allowing employers to defer workers’ payroll taxes between September and December optional for employees, including feds and members of the military.

In August, Trump signed a memorandum giving employers the option to defer Social Security taxes for the remainder of 2020. After most private sector businesses indicated they would not take part in the program, the Trump administration rolled it out across the federal government, making it mandatory for executive branch employees and military service members. Congress, the judiciary branch and the U.S. Postal Service all have elected not to defer their employees’ payroll taxes.

Making the deferral mandatory for federal workers has rankled federal employee groups, who have complained the implementation has been “chaotic and confusing” and fear that it will leave workers on the hook for an effective pay decrease when agencies have to recoup the deferred taxes next year.

The Protecting Employees from Surprise Taxes Act, introduced by Sen. Chris Van Hollen, D-Md., would require all employers, including the federal government, to have written consent from an employee to defer collection of their payroll taxes. If an employer has not received an opt-in from their employee, as is the case with federal agencies that began deferring the taxes last month, the employer would be liable for the deferred tax collection.

“President Trump is using federal employees and our troops as pawns in his payroll tax scheme, and it’s unacceptable,” Van Hollen said. “During this time of heightened uncertainty, our public servants deserve the ability to choose what makes most sense for them and their pocketbooks. That’s why the president’s payroll tax deferral must be made optional.”

The bill already has the support of nearly 20 federal employee unions, professional associations and other employee groups.

“The president’s payroll tax deferral scheme is nothing more than a scam on hardworking federal employees—making their paychecks look bigger until the end of the year, when they’ll be hit with a surprise increase in their payroll taxes right after the holidays,” said Everett Kelley, national president of the American Federation of Government Employees.

National Treasury Employees Union National President Tony Reardon decried the payroll tax deferral as a “temporary loan program” and said that workers should have the ability to choose whether to participate.

“The Protecting Employees from Surprise Taxes Act would allow federal employees to opt out of this gimmick and protect themselves from the burdens of higher taxes and smaller paychecks starting in January,” he said. “Federal employees who want to participate in the deferral would be able to continue doing so, which is how the federal government should have structured the program in the first place.”