Arizona Western College has decided to forgo the federal option for deferring social security taxes for its employees in light of the coronavirus pandemic.
The decision to allow employers to defer the employee portion of social security taxes comes from President Trump's memo issued on Aug. 8. On Aug. 28 the Treasury Department and the Internal Revenue Service (IRS) issued guidance for employers nationwide.
Social security taxes account for 6.2 percent of an employee's payroll. The tax deferral would apply to employees earning up to $4,000 per bi-weekly pay period for the period through Dec. 31. And since it is a deferral of taxes employees would be responsible for paying it back by April 30, 2021.
Arizona Western College chose not to participate. Therefore, its employees will continue to pay the 6.2 percent social security tax.
Arizona Western College's Chief Human Resources Officer Karen Johnson notified all campus employees Monday.
In a statement she said:
"Implementing the payroll tax deferral would significantly disrupt planned payroll upgrades including the new self-service for time and leave, increase [the] chance for pay errors, create a lack of consistency throughout the year in employee pay, and create no annualized financial benefit for employees." -Karen Johnson, Chief Human Resources Officer, AWC
Considering these factors Johnson said the benefits do not outweigh the challenges and risks in implementing that action.
