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.
Karun is a seasoned technology-focused professional with global IT industry experience in the insurance, pensions, and investment management sector. He has extensive experience in managing customer relationships, large-scale technology projects, platform selection & implementations and consulting engagements, and building and leading top-performing teams servicing users globally.
His research focuses on insurance technology trends and solutions for the EMEA region across P&C and L&H lines of business, as well as covering the London market.
Before joining Celent, Karun had spent 22 years with Tata Consultancy Services (TCS), where he contributed to expanding its insurance portfolio in Europe. Karun has a significant track record in winning, retaining & executing large multi-million global IT contracts for TCS, complete solution & cost ownership, and advising customers on their strategic initiatives. He brings a deep understanding of insurance technologies. Early in his career, Karun worked in the manufacturing and supply chain management domain and led consulting assignments on IT strategy and Enterprise Architecture.
Karun keeps track of changing technologies and business models in the financial service industry and regularly attends seminars and conferences. Karun has also published articles on emerging technologies such as quantum computing and crypto/blockchain. He has a bachelor's degree in Electronics and Communication Engineering from Calicut University and Certification in Fintech from Said Business school at Oxford University.
Karun lives in Cambridge, the United Kingdom, with his wife, daughter, and son.
Anna King, CPA, is CFO of Mesh Payments, a financial management platform. She was previously the long-time CFO of Transactis, a billing and payments processing company acquired by Mastercard.
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.
