School board opts out of deferring FICA tax

Published 11:14 am Friday, September 25, 2020

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Last month, President Donald Trump issued an executive order to defer withholding Social Security taxes for employees until next year, but employers may opt out of the plan, and the Clark County School District will continue the practice of withholding taxes.

During its meeting Monday, the school board voted to continue to withhold the taxes. If they had not, employees would have to pay them next year along with the taxes that are owed for next year.

If the board had deferred the payroll tax and employees had missed the April 30, 2021, deadline for paying the money back, penalties and interest would have begun to accrue on May 1.

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The tax deferral is intended as a form of temporary relief because of hardships caused by the effects of the coronavirus on the economy and personal finances.

Currently, some employees have 6.2 percent of their wages withheld through the FICA tax to pay for Social Security. The tax doesn’t apply to teachers currently employed because they don’t pay into Social Security and don’t draw benefits from the federal program when they retire, but it applies to other non-faculty employees such as administrative and support staff.

The deferral would have referred to wages paid from Sept. 1 to Dec. 31 of this year.

Only employees who earn less than $4,000 in a biweekly period would have been eligible for the deferral.

According to a memo, it is the administration’s belief that an employer may opt out of offering the relief, and even if an employer decides to opt in, it is not mandatory that an employee participates.

“Do we need action on this?” Scott Hisle, a school board member, asked Aleisha Ellis, the district’s financial director, during the meeting.

“I’ve been told that we have to make a formal opt out” if the district doesn’t defer the taxes, Ellis said.

That is also what she has been told by the school district’s auditor, she said.

“Have you received any requests to do this?” Hisle asked.

Some employees have asked to opt out, Ellis answered.

“Actually, no one has asked to opt in,” she mentioned.

Hisle then made a motion, seconded by William Taulbee, to opt out of the plan, and the motion passed 5-0.

About Randy Patrick

Randy Patrick is a reporter for Bluegrass Newsmedia, which includes The Jessamine Journal. He may be reached at 859-759-0015 or by email at randy.patrick@bluegrassnewsmedia.com.

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