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.
Ryan Stokes is Vice President, Business Development, Claims TPA & Solutions at Xceedance, a global leader in consulting, technology, operations support, and data solutions for the insurance sector. He focuses on growing the TPA/claims solutions with new partners and exploring new markets. Stokes has extensive knowledge and expertise in the property and casualty insurance industry, specifically in claims management, valuation and loss adjustment services.
David Trapp is CEO of ArmorPoint and its parent company Trapp Technology, both of which he founded in 2007 and 2018, respectively. He has almost two decades of experience in cybersecurity and IT services.
Gregg Golson CPCU, ACS, AIC, AIM, AINS, AIS, API, CSM is a speaker, consultant, and strategy coach. He has 25+ years in claims leadership, marketing, and strategic planning in the insurance industry. At J.S. Held, he helped create over 1,700 sessions for 135,000+ attendees while leading verbal thought leadership. Gregg has handled over 12,000 claims, been on 39 tours of catastrophe duty, and handled over 275 large losses in 13 states. He is a frequent speaker at national events on soft skills, resilience, and adaptability. He is currently the Lead Strategist at UP2Now LLC.
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.
