Many credit unions will not implement the recent Executive Order giving employees a deferral of their payroll taxes, the National Association of Federally-Insured Credit Unions and many other groups warned Tuesday.
“Many of our members consider it unfair to employees to make a decision that would force a big tax bill on them next year,” the groups, which included the U.S. Chamber of Commerce, wrote in a letter to congressional leaders and Treasury Secretary Steven Mnuchin.
The Credit Union National Association is not listed as having signed the letter.
President Trump recently signed an Executive Order directing the Treasury Department to defer payroll tax payments that employees are required to make until the end of the year.
NAFCU and the other groups said that order created great uncertainty because the order creates a substantial tax liability at the end of the deferral period. They said that without congressional action to forgive that liability, the order threatens to impose serious hardships on employees.
For instance, an employee earning $35,000 who is paid biweekly would receive an additional $83.46 each paycheck. When the deferral period ends—based on nine pay periods—that employee would owe $751.15.
That would create a significant burden for employees the groups said. “Many of our members will likely decline to implement deferral, choosing instead to continue to withhold and remit to the government the payroll taxes required by law,” the groups concluded.