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Senate joins House in not deferring payroll taxes for staff

President Donald Trump's tax deferral option proved too difficult to implement on Capitol Hill

The Senate will join the House in opting out of the payroll tax deferral option touted by President Donald Trump.

“My belief is that we are, we are not moving forward with the payroll tax deferral in the Senate,” Senate Rules and Administration Chairman Roy Blunt said Tuesday.

Blunt, a Missouri Republican, was asked about concerns noted last week by the Senate Disbursing Office about the ability of payroll software and systems to even implement such a change in tax withholding.

“I don’t know that it is totally because of the technical issue, but I do think we’d have to go in and go to every account,” Blunt said. “My understanding is we’re not going to do it, and the House isn’t either. Nor is the Supreme Court.”

Under the terms of the deferral announced by the president, employers may defer collection of payroll taxes from September through the end of the year, but under current policy the deferred taxes would need to be collected early in 2021. Trump has said that if he is re-elected the taxes will be forgiven, but that would require congressional action.

Workers making a salary equivalent to up to $104,000 per year are eligible for the deferral, meaning it would have covered many congressional office staffers, but not senior aides or the lawmakers themselves.

The Disbursing Office sent a mass email to Senate employees on Friday indicating the formal guidance from the Trump administration was still under review. Based on Blunt’s explanation of the situation Tuesday, it appears the Senate has reached a decision.

“The Disbursing Office has been reviewing guidance from the Secretary of the Treasury, consulting with other legislative branch agencies and Senate stakeholders, and actively working with the Senate’s software provider to determine the exact course of action the Senate will take. As soon as a final course of action can be determined, a new notice will be provided,” the email said. “Please note, paychecks will not be adjusted without prior notice.”

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Many other federal government agencies will participate in the tax deferral, but implementation on Capitol Hill would be fraught with special challenges, as Chief Administrative Officer Philip G. Kiko explained in a “Dear Colleague” letter regarding the House situation last week.

Among the concerns is what would happen to the deferred taxes due from staffers who leave their congressional employment at the end of 2020. Since it is an election year, many staffers may find themselves looking for work when their bosses in the House and Senate either retire or lose re-election.

Doug Sword contributed to this report.

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