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.
Jenn Kischell serves as vice president of Workforce Engagement, a unit within MetLife’s Financial Wellness and Engagement organization. With more than 25 years of experience, Kischell works with internal and external partners and customers to provide key enrollment communications and financial literacy. She is responsible for ensuring an understanding of the market, responding to customer demands, and supporting an infrastructure to drive successful sales and engagement with group customers and their employees.
Rob Levy is vice president of research and measurement at the Financial Health Network, where he leads the research and thought leadership practice.
Ryan McMahon leads Cambridge Mobile Telematics' Insurance and Government Affairs group, which works with partners around the globe to deliver results from their connected insurance programs. Ryan is passionate about technological innovation in the insurance industry. Before CMT, he worked in claims, product, corporate, and field marketing for both personal and commercial lines carriers. Ryan spent five years at Plymouth Rock Assurance where he ran the “More Than Just Insurance” platform and worked on a team to introduce the first of it’s kind telematics based rewards program to the U.S.
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.
