Update on Payroll Tax Withholding Deferral

Last edited 09/29/2021

Department of the Interior Workforce:

In order to provide relief during the COVID-19 pandemic, a Presidential Memorandum was issued on August 8, 2020 to temporarily defer social security (Old Age, Survivors, and Disability Insurance or “OASDI”) tax withholdings for certain employees. This tax deferral applies to all executive branch federal employees whose gross (pre-tax) pay during any bi-weekly pay period is less than $4,000 (including locality pay).

The Department of the Interior’s payroll provider, Interior Business Center (IBC), is working diligently to implement this tax deferral for impacted employees. IBC will automatically calculate employees’ eligibility for the tax deferral on a pay period-by-pay period basis. All eligible employees will be enrolled. There is no option to opt-out. The elimination of the social security tax withholding for applicable employees will be effective the pay period ending September 12, 2020. Employees impacted by the payroll tax deferral will notice the tax savings in their September 22, 2020 pay checks. The payroll tax deferral will continue through the end of calendar year 2020. Any deferred payroll taxes not withheld from employees’ wages during 2020 will be repaid from wages between January 1, 2021, and April 30, 2021.

We recognize that these changes have spurred questions from the workforce regarding how the tax deferral will be implemented. Please refer to our  2020 09 11 Payroll Tax Withholding Deferral Faq Final 508compliant [pdf]
to address many of the questions impacted employees may have.

The impact of the payroll tax withholding deferral is personal and dependent on the individual circumstances of each employee. Accordingly, employees are encouraged to discuss the implications of the payroll tax deferral with their financial and/or tax advisors. Employees may find the Department of the Interior’s Employee Assistance Program (EAP) to be a helpful resource. The EAP offers financial consultation regarding debt matters, investment options, money management, tax preparation and consultation and retirement planning. Employees can access EAP services 24 hours a day/7 days a week via phone at (800) 869-0276 or via the internet at www.espyr.com (log in password: interioreap).

For additional information or questions regarding the tax deferral, employees may contact their servicing Human Resources Office.

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