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.
Laz Vekiarides is co-founder and chief technology officer for ClearSky Data. Before ClearSky Data, he was an EqualLogic and Dell executive. Laz is an expert in data storage, virtualization and networking technologies, and holds several storage-technology patents.
Sarah Swanbeck is a public policy analyst with expertise in California state and local governance and budget issues. She previously worked in Legislative Affairs for California Common Cause, a nonprofit that advocates for more open, honest, and accountable government. Outside the realm of California politics, Sarah has spent years working as a policy analyst on both state and local issues. As an analyst for the Controller in San Francisco, she worked with a range of city departments to improve the efficiency and effectiveness of their services. She also previously worked for the Public Policy Institute of California and the the California Public Utilities Commission on state energy and water policy. She holds an MPP from the Goldman School of Public Policy at UC Berkeley and a BA in Economics from Wellesley College.
Sarah Anzia is a political scientist who studies American politics with a focus on state and local government, elections, interest groups, political parties, and public policy. Her book, Timing and Turnout: How Off-Cycle Elections Favor Organized Groups, examines how the timing of elections can be manipulated to affect both voter turnout and the composition of the electorate, which, in turn, affects election outcomes and public policy. She also studies the role of government employees and public-sector unions in elections and policymaking in the U.S. In addition, she has written about the politics of public pensions, women in politics, the historical development of electoral institutions, and the power of political party leaders in state legislatures. Her work has been published in the American Political Science Review, the American Journal of Political Science, the Journal of Politics, the Quarterly Journal of Political Science, and Studies in American Political Development. She has a Ph.D. in political science from Stanford University and an M.P.P. from the Harris School at the University of Chicago.
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.
