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.
Chris Raimondo leads EY’s Robotics and Intelligent Automation practice for the Insurance sector. Chris has more than 15 years of Insurance process improvement and technology experience. In addition to leading US- and Canada-based insurance organizations through large-scale operational transformation programs, Chris has been involved as a business architect and program advisor in insurance operational and technology transformation programs across Europe, Asia-Pacific and Australia.
Rob Dietz is a Principal in the Advisory Services practice of Ernst & Young LLP. He has more than 20 years of experience in Property and Casualty (P&C) insurance. His work in the P&C insurance industry includes business and technology transformation, business process reengineering, software evaluation and selection, business case development and managing the delivery of large-scale technology implementation programs in onshore and offshore models, including multiple full lifecycle implementations of core insurance systems across a variety of platforms.
Gregg Dooge is a partner and business lawyer with Foley & Lardner LLP. Since 1984 he has practiced in the employee benefits area representing employers with respect to ERISA and tax issues that arise in connection with the executive compensation, deferred compensation, pension, profit sharing and welfare benefit plans that they sponsor. He is chair of the Employee Benefits & Executive Compensation Practice and a memb
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.
