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.
Tim Kelly, president of Auto Financial Group
Wes Rhea is the Chief Compliance Officer for BioIQ, a company that works with healthcare organizations to better engage patient populations through technology.
Karen Furtado, a Partner at SMA, is a recognized industry expert in the core systems space. With exceptional knowledge of policy administration, rating, billing, and claims, Karen is the go-to person for all things core systems and rating. Insurers seek her unparalleled knowledge in mapping solutions to business requirements and IT needs. IT solution providers look to Karen for guidance in planning and targeting offerings in the insurance market.She has more than 25 years of technical and business experience within the insurance industry. While her specific areas of expertise include complex system implementations, vendor selection processes, project management, application development, and business process and technical outsourcing, her career-long focus has been on delivering high-value solutions for core issues facing insurance carriers.As the Insurance Practice Director at Collaborative Consulting, Karen played a key role in bringing a vision to the direction of the insurance business and an understanding of required service offerings to Collaborative's IT consulting practice. Prior to her tenure at Collaborative Consulting, Karen was Vice President of CGI's Insurance Practice. In that role she had responsibility for development of the strategic direction and oversight of CGI's insurance software services, ASP services, and its core insurance Business Processing Outsourcing (BPO) practice. Karen has significant experience with CGI's core insurance services including Ratabase, Mass Auto, and Assigned Risk Auto processing services.
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.
