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.
Ori Eisen has spent the last twenty-two years in the cybersecurity and information technology industry, and is respected for his business knowledge and leadership. His background includes an in-depth application of innovative solutions for preventing online fraud.Priorto founding Trusona, Mr. Eisen was the Founder and Chief Innovation Officer at 41st Parameter – the leading online fraud prevention and detection solution for financial institutions and e-commerce and travel merchants. 41st Parameter was acquired by Experian in 2013.Prior to 41st Parameter, Mr. Eisen served as the Worldwide Fraud Director for American Express focusing on Internet, MOTO and counterfeit fraud. During his tenure with American Express, Mr. Eisen championed the project to enhance the American Express authorization request to include Internet specific parameters.Prior to American Express, Mr. Eisen was the Director of Fraud Prevention for VeriSign/Network Solutions. By developing new and innovative technologies, he skillfully reduced fraud losses by over 85 percent in just three months.Mr. Eisen has an extensive background in developing system infrastructure and implemented solutions, and he is highly regarded in the information and payment technologies industry as a noted leader and technology innovator. Based on this reputation Mr. Eisen is often quoted by industry insiders, and receives numerous invitations to appear as a keynote speaker for industry events and conferences.Mr. Eisen holds a Bachelor of Science degree in business administration from Montclair State University.
Phil Cunningham is CEO of Advicent, an enterprise technology solutions provider.
Edward Mendlowitz, CPA, is a partner at Withum. He has frequently been named to Accounting Today's list of the Top 100 Influential People, and is the author or co-author of 30 books, including “How to Review Tax Returns” and “Managing Your Tax Season.” He also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com along with the Pay-Less-Tax Man blog for Bottom Line. He is an adjunct professor in the MBA program at Fairleigh Dickinson University, teaching end user applications of financial statements. Art of Accounting is a continuing series where he shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. He welcomes practice management questions and can be reached at (732) 743-4582 or emendlowitz@withum.com.
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.
