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.
Reid is the president of Reid Group Enterprises, which includes twentytwenty Insurance Services, Broker Self Insurance Solutions and AISLe20. Starting her career with Great West Life, Reid has worked with self-insured plans for more than 35 years. Through Broker Self Insurance Solutions, Reid works with other brokers, helping them consider and manage self-insured plans. Reid built AISle20 in 2014, a private exchange open to independent brokers. As an industry leader, Reid has been featured as a key speaker and educator on various topics that bring innovative ideas and 21st Century technology to employers. As a board member for the Los Angeles Association of Health Underwriters and the 2013 Paladin Award winner, she believes it is critical for independent brokers and agents to work together to inspire action to achieve success. Please contact Reid for more information on self-insurance and private exchanges at (562) 429-6038.
Orla McCaffrey is a Seattle-based reporter covering national and regional banks. Before joining American Banker in 2022, she worked at The Wall Street Journal, where she covered banking and housing finance. She is a graduate of Binghamton University and the Craig Newmark Graduate School of Journalism at CUNY.
As CMO, Nancy Sansom is responsible for marketing and communications at PlanSource. With more than 15 years of executive leadership experience within highgrowth SaaS companies, she excels in marketing, communications, P&L and product management, software design, business development and HR. Prior to joining PlanSource, Nancy served on the senior leadership teams at Benefitfocus and PeopleMatter. During her 10-year career at Benefitfocus, Nancy led product strategy and management, marketing and product design. Most recently she was CMO at PeopleMatter, where she developed the PeopleMatter brand while building a demand generation engine for driving topline growth. Nancy earned her MBA from Carnegie Mellon University and has been a member of the Kellogg School of Management’s Executive Education program.
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.
