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.
Andy Brown is a director at Wise Owl Training, an organization that provides computer training for businesses and individuals.
John Jureller is managing director at Accordion, the private equity financial consulting firm focused on the Office of the CFO.
Tom Benton, Partner at ReSource Pro is an industry thought leader with experience as an insurance CIO and as an industry analyst and consultant. Tom leverages his experience to help insurers prepare for and implement strategic transformation initiatives. Tom also advises insurance technology providers on how to better align with industry needs and trends.
Tom's passion is to help insurers and their technology providers develop strategic plans to successfully implement innovative solutions for improving customer experience, reducing risks, and increasing operational efficiency. Tom has over 20 years of experience directing successful IT strategies at numerous organizations, including as CIO at an insurance carrier and as CIO / CTO at non-profit organizations. He also has nearly 10 years of experience providing advisory and consulting services to insurers and insurance technology providers, including major core systems vendors, IT services providers, and insurtech startups. Tom's expertise includes IT capability assessment, IT strategic plan development, transformation preparedness, customer experience, and vendor selection.
Prior to joining Strategy Meets Action, Tom served as VP of Research and Consulting at Novarica, Chief Information Officer at Navy Mutual and CIO/CTO at two major nonprofits in the Washington, DC area. He holds a master's degree from MIT and a bachelor's degree from Cornell University.
Tom has contributed to numerous industry reports and insurance publications and has been a frequent speaker at industry conferences and webinars.
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.
