News of the Day

Late on Friday, the IRS issued much-anticipated guidance on the payroll tax deferral that was ordered by President Donald Trump in a presidential memorandum on Aug. 8 (Notice 2020-65). The notice allows employers to defer withholding on affected employees’ compensation during the last four months of 2020 and then withhold those deferred amounts during the first four months of 2021

Under the guidance, employers can defer the withholding, deposit, and payment of certain payroll taxes on wages paid from Sept. 1 through Dec. 31, 2020. The deferral applies to the employee portion of the old-age, survivors, and disability insurance (OASDI) tax under Sec. 3101(a) and Railroad Retirement Act Tier 1 tax under Sec. 3201. The due date for withholding and payment of these taxes is postponed until the period beginning Jan. 1, 2021, and ending April 30, 2021.

The deferral applies to any employee whose pretax wages or compensation during any biweekly pay period generally is less than $4,000.

Under the notice, the determination of applicable wages is to be made on a pay-period-by-pay-period basis — meaning that if the amount of compensation payable to an employee for a particular pay period is less than the threshold amount ($4,000 for biweekly pay periods), then the payroll tax deferral applies to that compensation, irrespective of the amount paid to that employee in other pay periods.

The notice requires affected employers to withhold and pay the deferred taxes from wages and compensation paid during the period between Jan. 1, 2021, and April 30, 2021. Interest, penalties, and additions to tax will begin to accrue on unpaid taxes starting May 1, 2021. The notice says, that, if it is necessary, employers can “make arrangements to otherwise collect the total Applicable Taxes from the employee” but does not provide details on that requirement.

U.S. consumers increased their spending by 1.9% last month, a dose of support for an economy struggling to emerge from the grip of a pandemic that has held back a recovery and kept roughly 27 million people jobless.

The July gain marked the third straight monthly increase in consumer spending, the primary driver of the U.S. economy, but represented a slowdown from the previous two months. Friday’s report from the Commerce Department also showed that income rose 0.4% in July after two months of declines.

The economy, after a catastrophic fall in the April-June quarter, is likely expanding again. Home and auto sales have been strong. Stock prices have set record highs.

President Trump’s payroll tax holiday is scheduled to start next month, but the government has yet to issue guidance to businesses or payroll processing firms — which means employers may be unlikely to participate.

Pete Isberg, vice president of government relations for payroll processing firm ADP, told FOX Business that he is surprised guidance hasn’t been issued by now.

“It’s unlikely that many employers will be able to make the programming changes by September 1,” Isberg said. “We’ve advised Congress and Treasury that anything like this normally requires at least six months for an orderly programming transition.”

Isberg, who has met with the IRS about the issue, said that changing tax rates in the middle of the year, mid-quarter and applying it to selected employees is no simple feat — and may mean that wages need to be recorded separately during the deferral period.

Meanwhile, Isberg noted there are many details employers still need to know, including whether the measure should be an option for all employees if an employer offers it; how workers should elect to defer or not to defer; and what happens if an employee doesn’t make a selection.

New orders for manufactured durable goods in July increased $23.2 billion or 11.2% to $230.7 billion, the U.S. Census Bureau announced today.

This increase, up three consecutive months, followed a 7.7% June increase. Excluding transportation, new orders increased 2.4%. Excluding defense, new orders increased 9.9%. Transportation equipment, also up three consecutive months, led the increase, $19.6 billion or 35.6% to $74.7 billion.

Durable Goods sector is the portion of the economy that provides products that have a utility over long periods of time before needing repurchases – like cars, refrigerators, and planes.

Wisconsin’s 118 state-chartered credit unions continue to have strong financial performance as of June 30, 2020, according to data released yesterday by the Wisconsin Department of Financial Institutions (DFI).

Since year-end 2019, credit union total assets have increased by nearly $6 billion to $46.9 billion and total shares are up to more than $5.4 billion. In addition, with an increase in loans to be more than $1 billion, the loan-to-share ratio dropped from 95.06% at year-end 2019 to 84.88%.

In the six months ending on June 30, 2020:
• Net income was strong at nearly $208 million, 0.94% of average assets;
• Loan balances were nearly $34 billion with an annualized loan growth rate of 6.67%;
• Delinquent loan to total loan ratio was 0.56%, down from the year-end ratio of 0.70%, and still at a historically low level;
• Net worth to assets were at 10.40%, which is a strong ratio despite a decrease due to asset growth; and
• Total assets were $46.9 billion with asset growth at 28% compared to a little more than 14% growth at the same time last year.

“Despite these unprecedented times, Wisconsin’s state-chartered credit unions continued to perform relatively well during the first two quarters of 2020,” said DFI Secretary Kathy Blumenfeld.

Wisconsin schools now have uniform instructions for when and how to shut down in the event of a COVID-19 outbreak as part of new guidelines from the state health department to help districts manage infections during the school year.

The document — which is not a mandate — builds on the limited guidance Wisconsin schools have received from the state since the threat of the coronavirus pandemic became elevated in the spring, leading public health officials in March to shut down all public and private K-12 schools.

Here’s what closures could look like in your child’s classroom, school or district:

School administrators could shut down a classroom or cohort if …

• Classrooms need to be cleaned and no additional rooms are available for students
• Contact tracing is being done, especially when multiple cases are being traced at once
• Other mitigation strategies were tried and were unsuccessful at stopping spread between classmates
• A teacher is absent and no substitute teacher is available
• More students in the class or cohort are absent than present

School administrators could shut down a school if …

• The number of staff absences are impeding instruction or the ability to provide lunch or other vital activities
• More student cohorts are absent than present
• Schoolwide disinfecting needs to be conducted
• Other mitigation strategies were unsuccessful at halting an outbreak

District administrators could shut down a school district if …

• The local, county, state or federal government recommends closure
• The number of staff absences in the district are impeding vital district functions
• Contact tracing is occurring for cases in multiple schools (for example, in response to an outbreak traced to a multi-school sporting event)
• Other mitigation strategies were unsuccessful at halting an outbreak

Yesterday, the Governor’s Task Force on Student Debt announced the release of its final report on student debt prepared at the request of Governor Tony Evers.

The report outlines eight recommendations for how Wisconsin can provide relief, education, and protection to its student debtholders now and in the future. They are:

1) create a Borrower Bill of Rights and Student Loan Ombudsman;

2) enhance proprietary school regulations and reinstate the Educational Approval Board;

3) improve financial literacy education;

4) increase need-based, targeted aid for postsecondary education and create a statewide promise program;

5) strengthen student loan counseling;

6) consider targeted loan forgiveness programs;

7) promote refinancing opportunities with other states; and

8) create a state student debt relief tax credit.

These recommendations are the result of expansive dialogue between experts from government, industry, academia, and student loan borrowers.

The Governor’s Task Force on Student Debt was created by Executive Order #67 to address the growing student debt crisis in Wisconsin. The 32-member task force included borrowers, industry leaders, legislators, financial aid experts, and lenders to share a broad spectrum of ideas and experiences to inform the work of the task force.

Wisconsin’s existing home sales hit a new record for the month of July, which increased prices by double digits, according to the most recent monthly analysis of the state housing market by the Wisconsin REALTORS^® Association (WRA).

Sales of existing homes rose 7.6% in July relative to that same month in 2019, and the median price rose to $226,400, which is 10.4% higher than July 2019. On a year-to-date basis, sales are now only slightly lower than this time last year, with sales in the first seven months of 2020 just 1.9% below the same period of 2019, and prices are up 8.4% to $213,000.

“July was a remarkably robust month for home sales, given what we’ve been through the past four months,” said WRA Chairman Steve Beers. A total of 9,649 homes were sold in July, the most homes sold during a July since the WRA re-benchmarked its data-collection methods in 2005. The previous record was July 2019, when 8,969 home sales closed.

Over the last 12 months, home sales were up 18.6% in the North region, and they rose 11.1% and 11.7% in the Central and West regions, respectively. “This makes sense because rural areas have higher inventory levels,” said Beers. Statewide, rural counties had 6.4 months of available supply in July, compared to just 3.4 months of supply in the metropolitan counties.

“We had record home sales because we had record-low mortgage rates,” said WRA President & CEO Michael Theo. This was the fourth straight month where the 30-year fixed mortgage rate dipped into record-low territory, falling to 3.02% in July. By comparison, mortgage rates were at 3.77% just a year ago, so they have fallen three quarters of a percent.