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.
Jonathan Mondillo, Head of Municipals, abrdn
Amar Patel is director of cost segregation at KBKG. Previously, he spent 15 years at a Big Four accounting firm and one year at Centiv LLC, focusing on various specialty tax products including cost recovery solutions and research and development tax credits. In the past 16 years of practice, he has specialized in cost segregation and large fixed asset depreciation reviews for purposes of identifying federal, state and property tax benefits.
Serhat Guven is Willis Towers Watson’s Insurance Consulting & Technology Global Leader for P&C Pricing, Product, Claims, and Underwriting propostion. He and his team are responsible for the delivery of consulting services and technology solutions that are uniquely designed to help insurers respond to significant industry trends; as well as provide carriers support in core areas that are fundamental for effective business management and profitability.
Prior to his current role, Serhat Guven was Willis Towers Watson’s Regional Line of Business Leader for the Americas. In this capacity he was responsible for go to market strategy and development of the full range of consulting services and software solutions to insurance companies. Before joining Willis Towers Watson, Serhat spent nine years in a variety of positions at United Services Automobile Association (USAA), where he was the technical expert on multivariate pricing, demand modeling, classification and tiering analysis, territorial ratemaking, and data management.
Serhat’s primary area of expertise is developing advanced analytics solutions for a wide variety of insurance applications.
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.
