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.
Donlan is senior vice president of the broker segment at Connecture Inc.
Nunemaker is the CEO of Dynamis Software Corporation, a provider of sales software in the healthcare insurance industry. Prior to co-founding Dynamis, he served as president of Intermedix EMSystems and CEO of EMSystems (Intermedix acquired EMSystems in 2010). Nunemaker also held a number of executive roles with GE Healthcare including CEO of GE Healthcare for Australia, New Zealand and Southeast Asia.
Nunemaker serves on the board of directors for Valparaiso University, the Milwaukee Art Museum, the Marcus Center for the Performing Arts, the University Club of Milwaukee and the Milwaukee Symphony Orchestra, where he serves as its chair. He is also past-president and past board member of several Wisconsin community and business organizations. In addition, Nunemaker’s professional achievements and charitable work have earned him a number of prestigious awards.
Jenkins is the assistant vice president for product development at Colonial Life & Accident Insurance Company. Colonial Life is a registered trademark and marketing brand of Colonial Life & Accident Insurance Company.
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.
