The Internal Revenue Service released information on how employees now have until the end of the year to repay any payroll taxes they deferred from last year.
Former President Trump issued a presidential memorandum last August allowing Social Security taxes to be deferred for the rest of 2020, but under the order they had to be repaid by April 30, 2021. The coronavirus relief package that Congress passed last month extended the repayment period until the end of this year.
Relatively few companies actually implemented the payroll deferral for their employees because there was no guarantee that the deferred payroll taxes would ultimately be forgiven by Congress. However, federal employees and military service members were still required to accept the payroll tax deferral, meaning those taxpayers will be facing smaller paychecks later this year.
Jennifer Curry is senior vice president of global cloud services at INAP. She is an operational and technology leader with over 17 years of experience in the IT industry, including seven years in the hosting/cloud market.
Russel Davis is chief technology officer and chief operating officer at Vcinity. He has over 25 years of experience in management, operational and technical leadership roles ranging from start-ups to Fortune 500 companies. Prior to joining Vcinity, he was COO and CTO of Bay Microsystems, the co-founder and COO of a well-funded venture developing telecommunications hardware and the service platform managing NFC devices and transactions for transportation and payment systems. He also served as CTO and VP of Product Development for CIC (public company), Director of Services for Everex Systems (acquired by FPG), Field Services Engineering Management at Centel Information Systems (acquired by Sprint) and supervised onboard Electronic Warfare operations in the US Navy.
Corey Needles is senior vice president and general manager at INAP USA.
In Notice 2021-11, the IRS on Tuesday explained how employers who deferred payroll taxes on behalf of their employees can withhold and pay the deferred taxes throughout 2021 instead of just within the first four months of the year.
The deferral applied to employees who were paid less than $4,000 every two weeks, or an equivalent amount for other pay periods, with each pay period considered separately. The taxes, which are technically called Old Age, Survivors and Disability Insurance, or OASDI, are calculated at 6.2 percent of employees’ wages.
Notice 2021-11 makes changes to last year’s Notice 2020-65 to reflect the extended payment period. Payments made by Jan. 3, 2022, will be considered to be timely because Dec. 31, 2021, is a legal holiday. However, any penalties, interest and additions to tax will now start to apply on Jan. 1, 2022, for any unpaid balances
The IRS cautioned that employees could see their deferred taxes being collected immediately, so employees should check with their organization’s payroll point of contact on what their collection schedule will be.
