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.
The research reveals improving the claims process and enhancing customer experience are top digital transformation priorities, making them the primary levers driving adoption and implementation of digital tech
Marc Rothchild is senior vice president, head of claims at Xceedance, a leading global provider of strategic operations, support, technology, and data services for insurance organizations. He leads the claims business at Xceedance, bringing 20 years of operations and technology leadership experience across the insurance, software and supply chain distribution industries. Prior to Xceedance, he spent 13 years leading various U.S. and global teams across claims, operations, analytics, and technology at AIG —most recently for its digital commercial insurance carrier, Blackboard Insurance.
Peter Flynn is senior vice president, personal lines America at Xceedance, a leading global provider of strategic operations, support, technology and data services for insurance organizations. He oversees all client engagements and the Xceedance product offering within the sector. Prior to joining Xceedance, he was senior vice president of broker development at PURE Insurance, a high-net-worth personal lines specialist insurer. His career also includes a significant tenure of 15 years at Chubb, where he was involved in underwriting and sales and held various leadership roles.
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.
