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.
Zana Tomich is co-founding partner of Dalton & Tomich PLC, based in Detroit, and provides outside general counsel services to her clients, including experience representing CPA firms.
Ben Madick is the Co-founder and CEO of Matic Insurance, a digital P&C insurance marketplace. Founded in 2014, Matic’s insurance platform has over 40 A-rated home and auto carriers, as well as distribution partners in industries ranging from mortgage origination and servicing to banking, real estate, auto companies, and more. Prior to Matic, Ben co-founded MQMR, a firm that performs compliance risk management and audit support to mortgage lenders and banks.
Brian C. Tate is president and CEO of the Innovative Payments Association.
A native Marylander, Brian is a graduate of the Howard University School of Law and is licensed to practice in the state of Maryland and the U.S. Supreme Court. In addition, Brian has an M.A. in political management from The George Washington University, and a B.A. in political science from King's College (Pa.). Brian was also a White House intern during the Clinton administration in 1996.
After graduating from law school in 2004, Brian first started working in the financial services sector when he began working as an advocate for the credit union industry. During his time with the credit unions, Brian held the position of vice president for legislative affairs (MDDCUA) and director of state advocacy (CUNA).
In 2009, Brian joined the Financial Services Roundtable as vice president of banking. At FSR, Brian represented banks, card issuers and networks, asset management and insurance companies. Further, Brian led FSR efforts on interchange fees, orderly liquidation authority, fiduciary duty and retirement security. Work with member companies to develop public policy agenda and advocacy strategies on a wide range of issues before the administration, Congress and regulatory agencies.
Brian Tate currently resides in Silver Spring, Maryland, with his wife and three children.
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.
