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.
Matthew Carroll is president and chief executive officer Immuta, a data management platform for data science, and is the former chief technology officer for CSC's Defense & Intelligence unit. Matt has spent the past decade analyzing some of the world’s most complex datasets while supporting multiple US government customers.
Erika Van Noort is the senior director of strategic enablement at Softchoice, a software solutions
and managed services provider. In her role, she works with clients to build understanding and alignment between lines of business and IT stakeholders. Erika has more than 10 years of experience in technology strategy development and consulting.
Patrick McFadin is the vice president of developer relations at DataStax, where he leads a team devoted to making users of DataStax products successful. He has also worked as chief evangelist for Apache Cassandra and consultant for DataStax, where he helped build some of the largest deployments in production. Previous to DataStax, he was chief architect at Hobsons and an Oracle DBA/developer for over 15 years.
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.
