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.
David currently leads Xero's US Enterprise Accounts team, where he and the team of innovators help to inspire the country's top 300 largest accounting firms along their journeys in modern cloud accounting, with a focus on consulting those firms on where they are today and how they achieve their cloud transformational journeys.
In the first eighteen years of his career, David Emmerman was a co-managing partner in the firm Emmerman, Boyle & Associates, LLC and there showcased his talent for working with small business clients and his team to develop a best in class accounting experience. His passion for technology and extensive involvement with cloud-based solutions led him to a role with Xero as a National Ambassador, where he spent his time leveraging his background to educate some of the largest accounting firms on practice management and cloud adoption topics.
Meredith has almost four decades of industry operations and technology experience spanning all lines of business and the entire insurance value chain. During her 33 years at Liberty Mutual, she was responsible for numerous digital, product, and organizational transformations. Meredith was most recently the industry go-to-market strategist at Ushur, an AI SaaS startup, driving growth and brand awareness across both the P&C and LA&H segments.
As part of the Advisory and Research team at ReSource Pro, Meredith works directly with carrier advisory clients, engages in research efforts, and supports carrier consulting projects.
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.
