
Senator Chris Van Hollen (D-MD) Friday announced legislation to make the payroll tax deferral outlined by President Trump optional for any worker whose employer chooses to participate, including federal employees and service members. If passed, the legislation — the Protecting Employees from Surprise Taxes Act — would require federal employees to opt-in to the program in writing rather than being automatically enrolled.
This bill follows several lawmakers’ efforts of urging the Trump Administration to give federal employees the option to opt out of having their payroll taxes deferred under president’s August 8 executive order.
The payroll tax deferral has been met with opposition since it is a deferral program rather than tax forgiveness program. This means the deferred taxes in 2020 will likely have to be paid back in 2021 making federal employees’ paychecks smaller than they normally would be. The payroll tax deferral is optional for private employers, but federal employees that make less than $4,000 per pay period have already had the deferral program applied to their pay in September.
“President Trump is using federal employees and our troops as pawns in his payroll tax scheme, and it’s unacceptable,” said Senator Van Hollen. “During this time of heightened uncertainty, our public servants deserve the ability to choose what makes most sense for them and for their pocketbooks. That’s why the President’s payroll tax deferral must be made optional. Since this move has been described as ‘reasonable’ by President Trump’s own Treasury Secretary, I urge the Congress to act quickly on this commonsense measure.”
Van Hollen has pressed Treasury Secretary Steven Mnuchin and Office of Management and Budget Director Russell Vought on this issue. According to Van Hollen, during a recent senate hearing, Mnuchin stated that it would be “reasonable” to allow federal employees and members of the military to choose whether or not to participate.
The Protecting Employees from Surprise Taxes Act is cosponsored by 15 other democratic senators. It is also supported by groups representing federal employees, including: the American Federation of Government Employees, the National Treasury Employees Union, the International Federation of Professional and Technical Engineers, the National Federation of Federal Employees, the Federal Employee Education and Assistance Fund, the Senior Executives Association, and the Federal Managers Association.
“The federal government – or any employer – should not force its employees to take on debt through deferred payroll taxes that must be repaid next year. This bill would give employees the choice, placing the decision-making authority in the hands of the individual affected, where it ought to be,” said Ken Thomas, National President, National Active and Retired Federal Employees Association.
“FMA argues that federal employees deserve to be allowed to choose whether to accept the payroll tax deferral or not. The lack of choice on this issue, and refusal to allow feds to choose how they want to pay their payroll taxes, hurts them rather than helping them,” said Craig Carter, President, Federal Managers Association.
The full text of the Protecting Employees from Surprise Taxes Act can be found here.

