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.
Flora Coleman heads up the global policy and government relations team at Klarna. Before that, she developed the global government relations and social impact team at international money fintech Wise. This follows a decade of senior political advisory work, including three years as a senior legislative advisor to the U.K. Government.
Chris Bennett is a skilled senior leader in risk management technology with over 14 years of direct RMIS experience in client service, sales, and product management. As the Head of Strategy for the Origami Risk core solutions division, Chris is responsible for business development and strategic alliances as well as for delivering new business solutions to insurers, MGAs, TPAs and risk pools. Chris is skilled in both the RMIS and claims administration markets and previously served as Vice President with CS STARS where he was an integral part of the firm's period of rapid growth and high customer satisfaction. For more information on Origami Risk, visit https://www.origamirisk.com/.
Keri Johnson is a director at Stout. She has extensive expertise with SEC reporting, GAAP-compliant financials, acquisitions and divestitures, accounting process improvement and ERP system implementations. She specializes in oil and gas accounting as well as in many areas of technical accounting. Prior to joining Stout, she was the chief accounting officer at EAG Inc., where she led a team that provided accounting services to oil and gas clients.
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.
