One of the Trump administration’s latest efforts to help workers amid the coronavirus pandemic is off to a rocky start, the Hill reported. President Donald Trump signed a memo last month directing the Treasury Department to allow employers to defer payroll taxes from Sept. 1 through Dec. 31 for employees making less than $4,000 on a biweekly basis.

White House economic adviser Larry Kudlow told reporters Friday he thinks the deferral will be “extremely helpful,” and the administration is pushing for Congress to enact legislation to forgive the taxes.  

Under the IRS guidance, employers are allowed to stop withholding the 6.2% employee-side Social Security tax from paychecks through the end of the year. However, employers who participate will then need to recoup that money by increasing the amount of taxes withheld from employees’ paychecks from January through April.

The result is that workers whose taxes are deferred would see bigger paychecks this year and smaller than typical ones next year, unless legislation is enacted to forgive the deferred taxes.

Business groups expect many of their members to continue withholding Social Security payroll taxes from paychecks because there’s no guarantee the deferred taxes will be forgiven and they don’t want to be in a position where their employees are seeing less in take-home pay for the first four months of 2021.

Federal employees will be required to participate in the program. The Office of Management and Budget said the government will defer employee taxes in order to provide immediate relief during the pandemic. 

Unions that represent federal employees are upset that the deferral appears to be mandatory for eligible government workers, and are urging the Trump administration to allow employees to have a choice.

The proposal has many uncertainties and unknowns, according to Robert Delgado, principal-in-charge of the compensation and benefits group in the Washington national tax practice of KPMG. Delgado said businesses might have to manually track some information to appropriately defer the taxes.

“I think it’s a significant disincentive to businesses with all the uncertainties, the unknowns and the complications, as well as the expense of having to potentially manually process this,” he said.

Responding to concern and confusion from its members, the American Association of Certified Public Accountants posted this blog last week with recommendations on appropriate steps that  CPAs and their clients should consider regarding the proposed deferral.