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.
Anthony Hall is office managing shareholder of Littler Mendelson’s Orlando office.
Jason Tan is CEO of Sift Science.
Lynnette Kelly has been the Executive Director of the Municipal Securities Rulemaking Board (MSRB) since June 2007.� Ms. Kelly leads the day-to-day management of the MSRB, a self-regulatory organization whose mission is to protect investors, municipal entities, and ensure a fair and efficient municipal securities market.� It does so by developing rules for municipal advisors who advise on issuance, securities firms and banks that underwrite, trade and sell municipal bonds, and by operating information systems, including the Electronic Municipal Market Access (EMMA) system, designed to promote transparency and investor access to information.� The MSRB also serves as an objective and expert resource and repository of municipal market information.Previously, Ms. Kelly was a managing director and associate general counsel at�the Securities Industry and Financial Markets Association (SIFMA) (formerly The Bond Market Association), where she helped develop and implement legal, regulatory and best market practices in the fixed income markets, with a focus on municipal finance.�From 1990 to 1993, Ms. Kelly served as general counsel for the Municipal Assistance Corporation for the City of New York, and has worked at several law firms in New York City in all areas of municipal finance.�She graduated from the University of Nebraska in 1981 and from Tulane University School of Law in 1984.
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.
