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PAYROLL TAX DEFERRAL BRIEFING

On September 9, 2020, the FAA briefed NATCA on the August 8, 2020 Presidential Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster.  The Memo directs the US Secretary of the Treasury to use his authority to defer the payroll tax obligation for the American workforce for the period of September 1, 2020, through December 31, 2020.  While private employers may opt of the payroll tax deferral, the federal government cannot do so. 

The payroll tax deferral impacts any BUE whose compensation is less than $4,000 per pay period, calculated on a pre-tax basis.  This amounts to approximately $104,000 per year.  The Agency has calculated that the payroll tax deferral will affect 5,800 NATCA bargaining unit employees.  The Agency will determine who qualifies for the payroll tax deferral on a pay period by pay period basis, so an employee’s status could change if their compensation increases or decreases during the relevant time period. 

Affected employees will receive higher paychecks while the deferral is in effect, but the withheld tax must be paid from wages and compensation paid between January 1, 2021 and April 30, 2021, or interest, penalties, and additions to the tax will begin to accrue on May 1, 2021.  The Agency briefed that a tax waiver is being explored but is not guaranteed.

For the FAA, the payroll tax deferral begins in PP19, which runs from August 30, 2020 to September 12, 2020.  The payroll tax will be deferred from September 1 on, so the first two days of the pay period would be excluded.  Affected employees should see the information in their next paycheck.

The last paycheck that will reflect the payroll tax deferral will be for pay period 1 of 2021, which runs from December 20, 2020, to January 2, 2021.  The payroll tax will be deferred only through December 31, 2020, so the last two days of the pay period will be excluded.

Affected employees should anticipate that their PP2 checks in 2021 will reflect the repayment of the deferred payroll tax.  NATCA Labor Relations will continue to work with the Agency as new information becomes available on this  issue, including the implementation of any tax waiver.

POCs: Chief of Staff Dean Iacopelli, Special Counsel to the President Eugene Freedman, Director of Labor Relations Nicole Vitale, and Labor Relations Attorney Silverstein