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.
Brian Patrick Eha was a technology reporter for American Banker from February 2017 to March 2018. He is the author of How Money Got Free: Bitcoin and the Fight for the Future of Finance, the most comprehensive narrative yet written of the rise and fall and rise of this disruptive technology. The book, his first, has been praised by the editor-in-chief of Wired and described as "a fiber-optic cable extending into our uncertain economic future." Before writing it, Eha was an editor at Entrepreneur and a staff writer at CNNMoney. He has written on business, technology and culture for Fortune, The New Yorker and other publications. His first position upon joining American Banker in 2016 was that of national banking reporter.
Jasin is Maxwell Health's director of sales for the western United States, where he oversees and supports all the sales efforts and channels within our sales team in his region. Jasin brings more than 10 years of sales experience in a variety of industries, including engineering, real estate, and most recently software, to the insurance broker industry.
O.B. Rawls IV is CEO of iPayment.
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.
