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.
Noah Lang is a champion of health care access & coverage for underserved, low-income Americans who are often left out of the traditional employer benefits safety net. He is the co-founder and CEO of Stride Health, which has helped over 3 million gig workers and self-employed Americans access coverage. Stride is building an individualized portable benefits system in concert with brands including Amazon, Uber, DoorDash, Mastercard, Allstate, Oscar and Intuit. Noah collaborated with the US Department of Health & Human Services to help establish a unique public-private sector partnership to expand access to Affordable Care Act health coverage and premium tax credits called "Enhanced Direct Enrollment," which is now used by millions of ACA enrollees. Noah was a President's Scholar at Stanford University where he graduated with a degree in Product Design and was captain of the Stanford Triathlon Team. Noah is a proud father of 2 girls, an avid runner and endurance sports junkie.
Simon C. Mathews, MD, is an assistant professor of medicine at the Johns Hopkins School of Medicine and a researcher focusing on understanding and improving the quality of digital health. He also serves on the clinical advisory board of Vivante Health, a digital health company dedicated to helping employers improve digestive disease outcomes and reduce the cost of care.
Anthony J. Pugliese, CIA, CPA, CGMA, CITP is president and CEO of The Institute of Internal Auditors (The IIA), an international professional association that serves more than 265,000 global members.
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.
