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.
Nick Campbell is head of product strategy and innovation at Fraedom.
Srinivasa Vegi serves as president of data analytics and artificial intelligence at DMI, where he is responsible for business strategy, practice building and global project delivery. With 25-plus years of experience in information systems and 18-plus years of experience specific to data analytics, Dr. Vegi provides strategic guidance for customers to tame big data and achieve success using business intelligence, predictive analytics, AI and machine learning.
Prior to joining DMI, Dr. Vegi was at Wipro, in various capacities as head of analytics practice, APAC , head of analytics for global media and telecommunications, VP and head of the Integrated Solutions Group for Analytics Service Line and subsequently for the healthcare and lifesciences business unit.
As an accomplished business leader in strategic planning and execution, he excels at building niche competencies, delivering large transformational programs supporting growth and leveraging digital, big data, and cloud technologies impacting business outcomes. Dr. Vegi has helped many companies across varied business domains in their efforts to deploy data and analytics solutions.
Dr. Vegi earned his Ph.D. in computer science from Andhra University and his Bachelors in civil engineering from the National Institute of Technology, both in India. He has had several articles featured in trade journals.
Eileen Iles is a partner at Crowe, a consulting, technology and public accounting company.
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.
