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.
Todd Greenbaum is the CEO of Input 1, a leading provider of digital billing and payments solutions for the insurance industry. With more than 30 years of experience in insurance technology, he has driven innovation that modernizes premium billing and streamlines payments for carriers, MGAs, and agents. Todd's leadership has positioned Input 1 at the forefront of digital transformation across insurance operations and customer engagement.
Craig Walker is Head of Product Strategy at Digits, where he's helping to reimagine accounting in the age of AI. A seasoned industry leader, Craig was co-founder and founding CTO for online accounting and small business software, Xero. Craig is bringing that experience to building the next generation of accounting software in Digits.
Dr. David A. Wood is passionate about understanding new technologies and implementing them into the curriculum of Brigham Young University, where he works as the Glenn D. Ardis professor of accounting. He has published over 200 articles in a combination of respected academic and practitioner journals, monographs, books, and cases, including a recently released book on AI titled, "Rewiring your Mind for AI: How to Think, Work, and Thrive in the Age of Intelligence". He has helped companies and organizations around the world learn about and implement GenAI and other tech topics. He was previously named by Accounting Today as one of the 100 most influential people in accounting. He is a cocreator of a free generative AI governance framework (see http://genai.global/), and of two companies related to GenAI training and reviewing Excel workpapers (http://skillabyte.com/ and https://hiddenhawkai.com/).
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.
