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.
Lauren Saunders is the associate director of the National Consumer Law Center, and directs its federal advocacy program.
Art, a practical and results oriented professional services marketing leader, delivers more than just marketing and business development coaching and advisory services. He delivers an insider's perspective gained from working as a marketing director for two leading CPA firms, and also the global perspective from working with dozens of local, regional and national firms annually on the complex marketing and sales challenges they face. All told, his experience spans nearly 15 years in professional services marketing and sales.
Rina Pandalai is currently the Financial Services Strategy lead for Publicis.Sapient where she is charged with building out the FS Strategy practice along with overseeing all aspects of Thought Leadership and IP as it pertains to FS. She joined Publicis.Sapient in 2016 after 14 years at Citi’s Consumer Bank, where she held a number of Strategy and Execution roles across Cards, Wealth, and Retail Banking. Most recently, she was a Managing Director leading the Consumer Banking Transformation office where she managed the business’ strategy to pivot from a traditional brick and mortar bank to a Digital Enterprise. Prior to Citi, Rina worked at Navigant Consulting in San Francisco, where she was a Senior Consultant leading e-commerce and consumer product engagements. While in San Francisco, Rina also worked for a start-up called Vendio.com (now part of Alibaba) where she led their business development efforts. Before earning her MBA from Chicago’s Booth School of Business, she worked at Goldman Sachs Corporate Finance and Equity Research teams in both NY and Zurich respectively. Rina also has a B.S. from NYU’s Stern School of Business.
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.
