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.
There are signs of a slowdown in the economic recovery as the COVID-19 pandemic continued to spread.
As Head of Risk Management, Laura Levenstein has responsibility for BAM's risk management strategy and its oversight, including acting as chair of the Enterprise Risk Committee. Laura also serves on the Management, Underwriting and Credit Policy and Surveillance Committees. Before joining BAM, she was Senior Managing Director for Global Public, Project and Infrastructure Finance, which includes US public finance, global sub-sovereign, sovereign, project and infrastructure finance, at Moody's Investors Service. In that position, as part of the evaluation of the various rated entities, she was responsible for evaluating all types of risk in these sectors to the extent it could impact the entities' credit profiles. Laura was also responsible for managing all aspects of the rating business relevant to those sectors including, rating assignment, rating methodologies, process operations, strategy, financial performance, rating quality and reputational risks. Prior positions in her over 20-year career at Moody's included Senior Managing Director for Americas and Global Financial Institutions. Laura holds a B.A. in Mathematics from Cornell University.
Avani M. Desai is president at Top 100 Firm Schellman & Co. Inc., and a member of the ISACA.
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.
