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.
Zachary Conway is the founder and CEO of NYC-based Seeds Investor, a software platform for financial advisors to assess and understand investors' values and needs and automatically deliver personalized portfolios and reporting.
Kenneth Byrd serves as Vice President and Head of Protection New Business Operations for Protective Life Corporation, where he is responsible for leading telelife, submit, case management, policy issue, 1035 exchange, new business accounting, exception handling, compliance, customer guides, and policy revisions. Byrd, a 20-year financial industry veteran, oversees more than 250 teammates as well as third-party vendor relationships. With a budget of over $20 million, he develops and authors strategic plans, works to improve customer and distributor experiences, and delivers significant cost savings. Byrd achieved a bachelor's degree in accounting and management information systems as well as his MBA from the University of Alabama at Birmingham.
Matthew Mittelsteadt is a visiting research fellow at the Mercatus Center at George Mason 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.
