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.
J�r�mie Leroyer is CEO and co-founder of mobile shopping technology developer Airtag. Prior to Airtag, Leroyer was cofounder of Haiku/Europe Index, where he led as the director of marketing for multimedia and mobile. He has 10 years of experience creating and delivering technology-based marketing strategies.He also spent three years in strategy consulting for mobile marketing technologies at Arthur D. Little in Paris, working with clients including Bouygues, SFR and France Telecom. Leroyer holds an MBA from the European business school ESCP-EAP and IEP Paris.
Tana Law is a co-founder and senior vice president of Nvoicepay, a provider of B2B payment solutions to the enterprise
Amru Kotb is senior vice president and managing director of Cryptomathic GmbH, an Aarhus, Denmark-based technology company. He joined Cryptomathic in 2014 to lead growth in the EMEA region and has more than 20 years experience in the IT industry in Europe.
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.
