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Oracle EBS US Payroll Functional Technical Brief: Configuration Solution to Implement

Employee Social Security Tax Deferral, Repayment & Reporting (Doc ID 2710162.1)

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Oracle HRMS (US) - Version 12.1.3 and later

Information in this document applies to any platform.

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Oracle EBS US Payroll Functional Technical Brief

Configuration Solution to Implement Employee Social Security Tax
Deferral & Repayment

This document outlines the steps to optionally configure the EBS US Payroll application to implement the
deferral of employee social security tax deductions as outlined in the August 8th, 2020 Presidential Memorandum
on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster. It has also been updated with
steps on how to configure the EBS US Payroll application to recover the social security deferred deductions from
employees, plus how to report the repaid amounts on the 2020 employee W-2c.

On August 8th, 2020, the President signed a memorandum directing the Secretary of the Treasury:
“…to use his authority pursuant to 26 U.S.C. 7508A to defer the withholding, deposit, and payment of the tax imposed by
26 U.S.C. 3101(a), and so much of the tax imposed by 26 U.S.C. 3201 as is attributable to the rate in effect under 26
U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020, through December
31, 2020, subject to the following conditions:
(a) The deferral shall be made available with respect to any employee the amount of whose wages or compensation, as
applicable, payable during any bi-weekly pay period generally is less than $4,000, calculated on a pre-tax basis, or the
equivalent amount with respect to other pay periods.
(b) Amounts deferred pursuant to the implementation of this memorandum shall be deferred without any penalties,
interest, additional amount, or addition to the tax…”

On August 28th, 2020, the IRS published limited guidance on the Memorandum in Notice 2020-65: “Relief
with Respect to Employment Tax Deadlines Applicable to Employers Affected by the Ongoing Coronavirus
(COVID-19) Disease 2019 Pandemic”. This defined Applicable Wages as well as provided guidance on
Payment of Deferred Applicable Taxes as follows.

Applicable Wages:
For purposes of this notice, Applicable Wages means wages as defined in section 3121(a) or compensation as defined in
section 3231(e)3 paid to an employee on a pay date during the period beginning on September 1, 2020, and ending on
December 31, 2020, but only if the amount of such wages or compensation paid for a bi-weekly pay period is less than the
threshold amount of $4,000, or the equivalent threshold amount with respect to other pay periods. The determination of
Applicable Wages is made on a pay period-by-pay period basis. If the amount of wages or compensation payable to an
employee for a pay period is less than the corresponding pay period threshold amount, then that amount is considered
Applicable Wages for the pay period, and the relief provided in this notice applies to those wages or that compensation
paid to that employee for that pay period, irrespective of the amount of wages or compensation paid to the employee for
other pay periods.

Payment of Deferred Applicable Taxes

An Affected Taxpayer must withhold and pay the total Applicable Taxes that the Affected Taxpayer deferred under this
notice ratably from wages and compensation paid between January 1, 2021 and April 30, 2021 or interest, penalties, and
additions to tax will begin to accrue on May 1, 2021, with respect to any unpaid Applicable Taxes. If necessary, the
Affected Taxpayer may make arrangements to otherwise collect the total Applicable Taxes from the employee.

The IRS has indicated in other communications that employers can opt in or out of implementing the social security
employee tax deferral. Further, if an employee is terminated without recouping the deferred amount of social security tax
from them, it is still the employer’s responsibility to recoup, report and remit it.
Reporting Recovered Social Security Taxes

On Thursday October 29th, 2020, the IRS released a Post Release Change to Forms that provided instructions for
employers and employees on Form W-2 reporting of the deferral of the employee share of Social Security tax. The
following instructions were included in Form W-2 Reporting of Employee Social Security Tax Deferred under IRS Notice
2020-65:

“… If you deferred the employee portion of Social Security tax under Notice 2020-65, when reporting total Social Security
wages paid to an employee on Form W-2, Wage and Tax Statement, include any wages for which you deferred withholding
and payment of employee Social Security tax in box 3 (Social security wages) and/or box 7 (Social security tips). However,
do not include in box 4 (Social security tax withheld) any amount of deferred employee Social Security tax that has not
been withheld.
Employee Social Security tax deferred in 2020 under Notice 2020-65 that is withheld in 2021 and not reported on the 2020
Form W-2 should be reported in box 4 (Social security tax withheld) on Form W-2c, Corrected Wage and Tax Statement.
On Form W-2c, employers should enter tax year 2020 in box c and adjust the amount previously reported in box 4 (Social
security tax withheld) of the Form W-2 to include the deferred amounts that were withheld in 2021..."

Oracle EBS US Payroll Configuration Solution

In order to assist customers wanting to implement the social security tax deferral for eligible employees, recover those
deferrals in 2021 and report the necessary data for year end reporting, Oracle has provided a document containing the
steps to implement a configuration solution. This solution comprises creating new balances, elements as well as fast
formulas to calculate, but then defer the employee social security taxes (but not withhold them) for those employees who
are eligible. Note that two configuration solutions are provided: one for customers with Social Security configured to Self
Adjust and one for those who do not. Note that the solution assumes that all GREs within the same business group have
Social Security set to Self Adjust or all GREs do not.

Note: Some formulas within this Technical Brief were updated to accommodate multiple employee
payments within the same pay period. Other updates have also been made to add balance dimensions and
to correct the SS EE Tax Reduction formulas for both configuration solutions. The priority of the element "SS
EE Tax Reduction" has also been reduced in order to prevent possible iterative processing errors.

On January 15th, the document was updated with the steps to take to recover the deferred social security
deductions from employees.

On February 4th, one off patches were released for, and this document was further updated with the
applicable details o,f the reporting solution to assist customers needing to comply with IRS Notice 2020-65
for reporting the repaid social security deferral amounts on the 2020 employee W-2c.

Scroll down and click the link to view the Technical Brief document for complete details.

Created: September 11, 2020

Last Updated: May 25, 2021

Author: Oracle EBS Payroll Product Management & Development

REFERENCES

NOTE:2653702.1 - Oracle E-Business Suite US Payroll Position Statement: Families First Coronavirus Response Act (FFCRA)
NOTE:404478.1 - Americas (US, CA, MX) HCM High Priority Alert
NOTE:2656580.1 - Oracle E-Business Suite US Payroll Position Statement: H. R. 748: Coronavirus Aid, Relief, & Economic
Security (CARES) Act
NOTE:2651979.2 - Information Center for E-Business Suite (EBS) - COVID-19
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