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.
Erik Morton is vice president of strategy and corporate development at CommerceHub.
Ellen Friedman is principal technologist for MapR, a scientist, and O'Reilly author currently writing about a variety of open source and big data topics. Ellen is a committer on the Apache Drill and Mahout projects, and she has a PhD in biochemistry. Ellen is coauthor of a number of short data books published by O’Reilly Media, including Machine Learning Logistics, Streaming Architecture, thePractical Machine Learning series, Time Series Databases, and Introduction to Apache Flink. Ellen has been an invited speaker at Strata + Hadoop in London, Berlin Buzzwords, Nike Tech Talks, the University of Sheffield Methods Institute, and Philly ETE as well as a keynote speaker for Big Data London and for NoSQL Matters in Barcelona.
Ted Dunning, PhD, is a board member of the Apache Software Foundation, chief application architect at MapR, and author of the newly released "AI and Analytics in Production," a short book that addresses finding value with AI and machine learning. Ted has a long history in building successful startups where machine learning made a big difference in the value of the company. He is listed as inventor on dozens of patents and continues to develop new algorithms and architectures.
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.
