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.
Cliff Rosenthal retired from the Consumer Financial Protection Bureau but is best known to CUs as the former CEO of the National Federation of Community Development Credit Unions (now nown as Inclusiv).
Stanley Keller is senior partner at Locke Lord LLP who focuses his practice on corporate and securities laws. He chaired the ABA’s Federal Regulation of Securities Committee during the height of the Sarbanes-Oxley era and in that role interacted on behalf of the private bar with the SEC, other governmental officials and the stock exchanges. He served as Chair of the ABA’s Legal Opinions Committee and is currently leading the effort to establish a statement of nationally recognized opinion practices. He also was Chair of the ABA’s Audit Responses Committee. He was active in the ABA’s Task Forces dealing with SEC Attorney Conduct Rules, Corporate Responsibility and Attorney-Client Privilege. As a member of the ABA’s Corporate Laws Committee, he was Special Reporter for the 2016 Revision of the Model Business Corporation Act and before that was Co-Chair of the Task Force that drafted the Massachusetts Business Corporation Law. He also Chaired the Boston Bar Association’s Business Law Section and Corporation Law Committee.
Stuart Murdoch is a senior consultant with 45 years of experience in IT. He has spent the last 25 years working to bridge the gaps between IT, operational processes and business people. He is adept at communicating at all levels – from board-room strategies to shop-floor realization.
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.
