9/4/20
All active-duty military members as well as federal civilian employees will be subject to the president’s upcoming payroll tax deferral, a senior administration official told Federal News Network Friday evening. The president’s payroll tax deferral, which the administration said all payroll providers will launch in unison later this month, has left federal employees, their unions and members of Congress scrambling this week for more details about the policy and its impact on the workforce. The Coast Guard was the first military service to publicly inform its members that they’d be subject to the changes. In a message to the workforce Friday morning, the service said it will defer a 6.2% tax on employee wages and basic pay for military members from September through December, and that the deferrals are “non-negotiable.” The payroll tax deferral applies to all Coast Guard military members who make $8,666 a month or less, the notice said. As Federal News Network previously reported, civilian employees whose gross, biweekly wages are $4,000 or less are also subject to the payroll tax deferral.
The Coast Guard notice reiterates the payroll tax deferral affords employees no opportunity to opt out. The changes in payroll tax deductions are temporary, and federal employees will have to pay back deferred taxes starting in January. They’ll have until April to do so before penalties and interest may accrue, the IRS has said. The Coast Guard suggested employees and military members will pay the deferred taxes back over the course of several months, as opposed to a lump sum. “The deferred payments will be subtracted from paychecks in January, February, March and April 2021 in addition to regular withholding,” the notice reads.
