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.
Bobby Puglia is chief product officer at Bloomberg Industry Group, where he oversees Bloomberg Law, Bloomberg Tax, and Bloomberg Government. Prior to his current role, he served as architect of Bloomberg Law's data platform, leading the strategy and development of its proprietary legal search engine, as well as the machine learning and artificial intelligence research and engineering organizations that support Bloomberg Industry Group's products.
Blaine Frederick is VP of Product at Alcatraz AI, an artificial intelligence company that employs facial authentication technology to create autonomous access control solutions for enterprises. Frederick brings 20+ years of experience in the Physical Security industry with specific expertise in the Biometric space. Frederick currently serves as the VP of Product at Alcatraz AI where he leads the Product and Engineering teams. Prior to his work at Alcatraz AI, he served as Co-Founder and Principal of BDIS which provides Consultation and Professional Services for the physical security market. Previously, Frederick held the role of VP of Product for EyeLock, where he captained the firm's vision for iris authentication products and solutions in physical and logical security as well as numerous other commercial applications. Frederick also acted as the former Director of Product Management at STANLEY Security, a global division of Stanley Black & Decker where he led the creation of an industry-leading security management software suite, Commander. He received a B.S. in Electrical Engineering from Purdue University.
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.
