To: All Agency Directors
From: Dan Hynes, Deputy Governor, Budget & Economy
Subject: Payroll Tax Deferral
Date: September 14, 2020
As you may be aware, the President issued a memorandum in August deferring payroll taxes for certain employees for the period September 1 through December 31, 2020. The President’s action was a deferral, rather than a tax cut, absent an act of Congress making it permanent.
Recent guidance issued by the U.S. Treasury Department and the IRS indicates those deferred taxes would need to be repaid by both the wage earner and the employer beginning January 1 through April 30, 2021, or begin to accrue interest and penalties. Such a repayment could pose a tremendous hardship on state workers.
Be advised that the state of Illinois, for agencies under the Governor, will not be implementing this optional payroll tax deferral. Agencies should continue to process payrolls, including the deduction of payroll taxes, as they normally would.
Thank you for your continued service and dedication to the people of Illinois during these challenging times.