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File #: ID 20-001430    Version: 1 Name:
Type: Action Item Status: Agenda Ready
File created: 10/15/2020 In control: City Council
On agenda: 10/22/2020 Final action: 10/22/2020
Title: ***RESOLUTION - Authorizing and directing Finance to decline City participation in the optional federal payroll tax deferral program (Subject to Mayor's veto).
Sponsors: Finance Department
Attachments: 1. 20-0011333 Resolution, 2. Optional Payroll Tax Deferral Program Power Point Final.pdf
REPORT TO THE CITY COUNCIL



October 22, 2020


FROM: MICHAEL LIMA, Controller/Finance Director
Finance Department

SUBJECT
Title
***RESOLUTION - Authorizing and directing Finance to decline City participation in the optional federal payroll tax deferral program (Subject to Mayor's veto).

Body
RECOMMENDATION

Staff recommends that Council approve the accompanying Resolution authorizing and directing the Finance Department to decline City participation in the optional federal payroll tax deferral program.

EXECUTIVE SUMMARY

By executive order, the federal government has established a payroll tax deferral program. The program would allow employers to defer certain payroll tax obligations, specifically the Social Security payroll tax, from September 1, 2020 to December 31, 2020. Any employee who deferred taxes would need to repay them by May 1, 2021 to avoid penalties and interest. The program is voluntary for employers. Both the Finance Department and the City Attorney's Office have analyzed the program. It is the opinion of the Finance Department that City participation in this program would produce significant operational impacts, numerous legal issues, and greater financial liability. Thus, staff recommends that the Council approve a resolution declining City participation in this program.

BACKGROUND

President Donald Trump signed an Executive Order (85 FR 49587) on August 8, 2020. Under this order, employers can defer certain payroll tax obligations (specifically, the Social Security payroll tax) incurred between September 1, 2020 and December 31, 2020. The deferred taxes would need to be repaid by May 1, 2021, or penalties and interest will be assessed against the unpaid taxes. Participation in the program is optional.

There are approximately 400 City employees that currently have Social Security payroll tax deducted from their paychecks; and, thus would have these taxes deferred should the City choose to participate in the program. If part...

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