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.
Butler, MS, MCHES, is the senior wellness program management consultant at SelectHealth. His career in healthcare and health promotion spans over four decades, including 17 years of hospital-based experience at Intermountain Healthcare's LDS Hospital and 24 years working with Intermountain Healthcare’s SelectHealth. Butler was manager of health promotion services at SelectHealth from 1992-2002 and pioneered initiatives to develop and implement health promotion and disease management programs that were integrated with SelectHealth insurance products. He has a bachelor’s degree in health and physical education and earned his master’s degree in rehabilitation counseling psychology from the University of Utah. He is also a Master Certified Health Education Specialist.
Groppel, Ph.D., is the co-founder of the Johnson & Johnson Human Performance Institute. He is an internationally recognized authority and pioneer in the science of human performance and co-chair of the newly formed Global Alliance for Health & Performance. Dr. Groppel currently serves on an academic appointment as Professor of Kinesiology & Community Health at the University of Illinois @ Urbana-Champaign, and served as an Adjunct Professor of Management at the J.L. Kellogg School of Management at Northwestern University for several years. Dr. Groppel has addressed the issue of worksite wellness and performance at such policy events as the United Nations Side Event for Physical Activity and Non-Communicable Disease, a U.S. Congressional Briefing on Worksite Health Promotion, and represented the worksite wellness industry at the historic Surgeon General’s Call to Action on Walking and Walkable Communities.
Jon Baron is managing director of the professional segment of the tax and accounting business of Thomson Reuters, which he joined in 1992. Prior to his current position, he served as president of professional software and services, and vice president of development, where he was responsible for the design and development of all professional products and services. He holds a BBA in Accounting from Siena College and an MBA from Boston 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.
