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.
Kirsty Tull is marketing manager at BillPro, an international online payments provider specializing in secure online payment solutions for high and low-risk merchants. For more information, visit www.billpro.com or follow on twitter at @billpropayments.
Sharon Allen, CFP, ATFA, has almost 25 years experience helping affluent families and individuals manage wealth. She also teaches at the University of Illinois' Financial Planning program.
Carter Pape has covered cybersecurity, financial crime and emerging technology for American Banker since January 2022.
Pape, reporting from Sacramento, California, connects technical complexities to their practical consequences. He examines how cybercriminals target and infiltrate banks and how the technologies reshaping the world (such as AI and quantum computing) create new risks for banks and their customers.
Pape's work has earned recognition at the regional and national levels, having earned him an award and award finalist recognitions from the American Society of Business Publication Editors and SIIA.
Highlights of Pape's work include:
- No longer optional: Cyber risk oversight for boards, which examined the expanding liability exposure facing bank directors as regulators raise expectations for cyber governance;
- Inside a sophisticated, foiled cyber-heist targeting ATMs, an account of a coordinated attack on bank cash infrastructure and the defenses that stopped it;
- The promise and perils of QR codes in banking, which explored how a ubiquitous consumer technology became a vector for financial fraud.
- How quantum computers work, and how banks can use them, which broke down the physics and engineering of quantum computation and assessed the realistic near- and long-term implications for the banking industry
- Main Street banks can avoid Wall Street's WhatsApp fines. Here's how. This article explained how community banks could navigate SEC enforcement around personal device usage for work communications.
Pape's broader coverage at American Banker addresses data breaches, fraud prevention, regulatory compliance, artificial intelligence in financial services and the evolution of digital banking.
Before joining American Banker in January 2022, Pape spent three years as a reporter at The Times-Independent in Moab, Utah, where he was one of four full-time journalists covering a county of 10,000 people.
Pape reported on public lands, local government, housing and more. He also rebuilt the publication's website from the ground up, earning the Utah Press Association's Best Website award in 2019 for the redesign.
Pape's reporting on Moab won recognition from the Utah Press Association for excellence in government and politics reporting (first place) as well as general news (second place) and education coverage (second place).
Pape holds a degree in mathematics from North Carolina State University. At NC State he became news editor of the student newspaper, Technician, to get a break from the analytical and technical work of mathematical proofs. The experience inspired him to pursue a career in journalism.
Alongside his seven years as a journalist, Pape brings more than a decade of programming experience, having interned as a software developer for companies including IBM. He continues to regularly tinker with Python, Docker and shell scripting in his free time.
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.
