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K-State Research and Extension
123 Umberger Hall
Manhattan, KS 66506-3401

October 6, 2020

Deferring Payroll Tax Obligations

Submitted by Jennifer R Wilson

Last month, a Presidential Executive Memorandum and additional guidance from the Internal Revenue Service (IRS) provided the option for employers to implement a payroll tax deferral of 6.2% from September through December 2020 for employee paychecks under a specific threshold. For employees, the tax deferral program would only delay, not forgive, the responsibility for those taxes. Employees would be responsible for paying back the deferred taxes, essentially doubling the tax withholding from employee paychecks issued between January and April 2021, reducing employee take-home pay during that time.

Kansas State University works closely with the State of Kansas regarding payroll practices and payroll information. The State of Kansas has evaluated the IRS guidance and considered the impact to both paychecks and budgets of hard-working employees. Impacted employees would be required to balance the short-term increase provided by the deferral with the future reduction of net pay during the collection period. Kansas State University and the State of Kansas would also be responsible for ensuring proper collection of the tax liability by acting to recover the outstanding taxes of any employee who separates from state employment before the deferred taxes were collected.

After careful consideration of the factors associated with the payroll tax deferral process, Kansas State University, along with the State of Kansas has determined that it will not implement the payroll tax deferral program for their employees.