Congress Extends Payroll Tax Cut for Two Months

With just a few days to go, the Republican holdouts in the House of Representatives waived their objections to an extension to the payroll tax cut. (The NYSSCPA E-zine covered this is detail in yesterday's edition.) The cut, which was to expire this year, now runs through Feb. 29. Congress will work on extending it through the end of 2012.

The deal was to be made official today; CNN reported that both houses approved the extension this morning and that President Obama was to sign it shortly.  

As reported in the New York Times, the employee's share of the Social Security payroll tax will stay at the reduced 4.2 percent level. The government will continue paying additional unemployment insurance benefits, and Medicare will continue paying doctors at current rates.

The agreement also ensures that as a result of these temporary changes, "a complex new reporting burden is not unintentionally imposed on small business job creators," said House Speaker John Boehner (R-Ohio) in a statement on his website. He said the agreement contained "new language that allows job creators to process and withhold payroll taxation under the same accounting structure that is currently in place."

Obama pushed hard for this extension, with the official White House blog urging Congress to act with a midnight video post.