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.
Tom Wilde has 25 years of experience in solving the complex problems of digital content. He is currently CEO of Indico, a provider of enterprise AI solutions for intelligent process automation. Previously Tom has held senior management roles at Cxense, Fast Search, Miva Systems and Lycos. He is a frequent industry contributor and earned his MBA in entrepreneurial management from Wharton.
Gary Holland heads verticals marketing of IP optical networks for Nokia and is responsible for marketing Nokia's IP and Optical Networks (ION) portfolio to Enterprise, Industries, Government and Public Sector verticals.
Barry Zane is vice president of engineering at Cambridge Semantics. He brings substantial development experience and industry expertise in building large-scale products for data analysis.
Prior to Cambridge Semantics, Zane was co-founder and CEO of SPARQL City where he served as vice president of technology, whose high performance scalable graph database technology has been acquired by Cambridge Semantics and integrated within its Smart Data Lake and other offerings.
Previously, Zane was co-founder and CTO of Paraccel, a high performance scalable relational database system which provides the basis for Amazon Redshift. Paraccel was acquired by Actian Corporation as the Matrix product line. He was a co-founder and vice president of technology and architecture at Netezza, which after a successful IPO, was acquired by IBM. Before Netezza, Barry was CTO of Applix, Inc. Applix was also later acquired by IBM.
Barry began his career at Prime Computer, as a hardware engineer and ultimately various roles in software development and management. He holds a degree in Electrical Engineering from Carnegie Mellon University.
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.
