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.
Co-Founder & CEO
Glia
As small businesses in different parts of the country reopen in the midst of the novel coronavirus pandemic, they are beginning to increase the number of hours worked by their employees, according to payroll giant Paychex, although spikes in the virus are threatening to set back those gains.
Scott has been with Allianz for more than 24 years previously holding positions in Claims (forensic engineer and practice group leader), in Underwriting (Director of Catastrophe Management), in the Risk Office responsible for Corporate Catastrophe Management & Operational Risk, and in Risk Services. In these roles, Scott has sponsored and promoted the concept of using expertise and knowledge based insights to help improve the foundation and information on which organizations base analysis and financial decisions.
Before Allianz, Scott practiced as an environmental engineer at a national environmental engineering company for more than 6 years focused on design and implementation of pollution cleanup remedies for a variety of industrial clients.
He holds a Bachelor’s of Science degree in Agricultural Engineering and a Master’s of Engineering degree in Civil and Environmental Engineering from California Polytechnic State University, San Luis Obispo, California. Mr. Steinmetz is a registered professional engineer (P.E.) in the State of California.
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.
