Tax experts warn businesses ahead of payroll tax cut executive order
FARGO — A local tax expert is warning business owners against taking part in the payroll tax cut, saying it "kicks the can down the road."
One of President Trump's executive orders from last weekend gives employers permission to not withhold a 6.2 percent social security tax from paychecks.
WDAY News spoke with Devon Liljenquist, a CPA with Arrow Advisors in Fargo. He said under the current order, employers will eventually have to pay the losses. This would likely occur during the next tax season on or after January, but no timeline has been set for how long the cut will last — just that it starts September 1st.
Liljenquist recommends business plan as if these tax cuts have to be paid back by the next tax season in January.
"Continue to withhold that tax as you always have, until we get either a bill from congress or better guidance from the IRS saying how it's going to be handled," Liljenquist said.
He said only congress can pass legislation that would not require businesses to pay back what is lost from the cut, but time is already running out. His worry is this businesses could take the brunt of the cost, or be forced to increase the amount of money withheld from employee paychecks.
"In my opinion, making the decision to stop withholding this tax in hopes of congress passing a bill and coming to an agreement on this in an election year sounds like a risky move," Liljenquist explained.
Liljenquist believes payroll services like ADP are not equipped to stop withholding the tax cut by September 1st.