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.
Craig Granowitz, MD, is Senior Vice President and Chief Medical Officer at Amarin Corp.
Jeff Goldberg has spent his career as an IT executive, analyst, and entrepreneur in the insurance industry. He has led IT organizations at Marsh & McLennan and NIP Group and worked as an advisor to hundreds of insurers while at Datos Insights and Celent. Currently, he runs an insurer CIO Study Group and serves as an independent advisor to technology providers such as Socotra.
Josh Rowland is the chief executive officer and vice chairman of Lead Bank, a Missouri-chartered commercial bank with locations in the Crossroads Kansas City, Lee’s Summit and Garden City, Missouri. Josh serves in multiple management roles at the bank, including membership in the bank’s executive committee, loan committee, and oversight of the bank’s marketing and technology functions. Josh also serves as the executive director of Lead Business Advisors, a division of Lead Bank that advises companies on strategic planning, reorganizations and financing. He is also the president and CEO of Lead Financial Group, the holding company, which owns 100% of the bank.
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.
