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.
Rodney E. Hood is a board member of Zest AI. He is the former chairman of the National Credit Union Administration.
Ashley Ettwein is Head of Product at Pepper. Pepper is the leading IoT platform that enables brands, manufacturers, retailers and service providers to deliver smart home solutions to their customers. The customizable, US cloud-based Platform-as-a-Service (PaaS) with real-time video streaming provides a cost-effective and easy way for businesses to quickly launch and monetize products and services. With the addition of Notion smart monitoring (acquired December 2022), Pepper expands their insurance offering providing comprehensive, turn-key smart home programs. For additional information, visit: pepper.me.
As Vice President of Human Resources, Jena is responsible for executing a modern and scalable HR structure within the company. She manages all Human Resources programs, policies, procedures, and services, and her depth and breadth of experience with people and culture, and the application of that knowledge, are incredibly valuable.
Jena joined Central in 2020 as our Director of Organizational Development, focused on leadership development and employee engagement, as well as our employees' mental health and well-being. Before Central, she held the Senior Organization Development Psychologist/Consultant role with the Department of Veterans Affairs.
Jena earned a Bachelor of Science in Psychology from The Ohio State University and a Masters in Psychology and a Doctorate in Clinical Psychology from Indiana State University.
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.
