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.
Aaron Parker joined the MJ Insurance team in 2017 as a client executive in the Risk Management + Commercial Insurance department and has since been promoted to Vice President, Client Experience. A native of the industry, Aaron brings over a decade of extensive experience in enterprise risk management, claims, loss control and safety programs. Prior to joining MJ, Aaron worked as the senior insurance and risk manager for the State of Texas Office of Risk Management where he was responsible for leading the Insurance Services department and served as a consultant to more than 100 State of Texas government agencies and institutions of higher education.
At MJ, Aaron is responsible for the stewardship and strategic development of the MJ value proposition and delivering on all aspects influencing the overall client experience. Aaron acts as the internal conduit between the analytics, risk services, risk transfer and client advocacy teams to ensure seamless execution of client strategy while delivering exceptional customer service to 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.
