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.
Douglas Dell is Vice President – Executive Leader Learning & Development for Sedgwick. An accomplished leader in training, talent development and learning ecosystems, he is currently creating and implementing L&D for Sedgwick Property Americas spanning early career programs for apprentices and interns to the next generation and focused on advanced managerial, technical, and executive leadership including career paths and learning journeys. He concurrently manages the commercial learning services of Vale Training and Consulting Services, supporting technical skills for insurance adjusting and estimating professionals, skills assessments, professional certifications, and continuing education. Formerly, he held learning leadership roles at Crawford & Company, NCR and Philips Healthcare. Previously, he was the board advisor and Chairman of the Atlanta chapter of the Association for Talent Development and a member of the graduate faculty for the University of Phoenix; and a current board member of EVTEC - a certification standard for Electric Vehicle technicians and estimators.
Charles C. Roberts, Jr. is president of C. Roberts Consulting Engineers, Inc. (http://www.croberts.com). He has a bachelors degree, masters degree and a Ph.D. in engineering. He has worked as a consulting engineer in the area of accident reconstruction and failure analysis since 1976. He has published several books and articles on accident reconstruction, failure analysis and history.
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.
