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.
Patricia J. Goldsmith is Chief Executive Officer of CancerCare. A frequent speaker at national meetings and symposia, Goldsmith was named in 2021 to Forbes Magazine's 50 Over 50 Vision List, honoring women making an impact on society and culture. In 2022, CancerCare published a free Toolkit that helps inform the benefits package design and decision-making process and offers key considerations when plans include utilization management.
Alexander Hagerup is co-founder and CEO at Vic.ai, which is pioneering the use of autonomy and intelligence to digitally transform accounting and finance processes to improve productivity, decision-making, and ROI. Alexander is a serial tech entrepreneur with a strong passion for artificial intelligence. Prior to launching Vic.ai, he founded two other technology companies; his most recent venture was funded by Northzone Ventures and later acquired by NASDAQ-listed J2 Global Inc., in 2014.
Dave Reubzaet is director of global advisory and tax lead at the Global Reporting Initiative and leads the global engagement on tax, including the GRI 207 tax-reporting standard. In this role, he advises and engages with organizations around the globe to advance sustainability in policies, business strategies and reporting and emphasize its importance for sustainable development. He has more than 20 years of international experience in advising corporates and financial institutions on sustainability, from sustainable business strategy to risk management and sustainability reporting. His specialization is in sustainable tax, covering topics like responsible tax investing, good tax governance and tax transparency.
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.
