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.
The COVID-19 pandemic is likely to lead to long-term consequences for organizations, according to a survey of accountants around the world by the Association of Chartered Certified Accountants.
Dr. Tista Ghosh is the Senior Director of Impact Evaluation/Regional Medical Director for Grand Rounds,
where she works to help maximize and quantify Grand Rounds’ population health impact. As a physician
trained in both internal medicine and preventive medicine, Dr. Ghosh has broad experience in
population health at the local, state, federal, and international levels. She was the chief medical
epidemiologist for Colorado’s largest local health department, and has served as Chief Medical Officer of
the State of Colorado.
Dr. Ghosh received her MD from Indiana University and her master’s degree in public health from Yale
University. She also has had specialized training in applied epidemiology and public health practice
through the U.S. Centers for Disease Control and Prevention (CDC). She has also served our country as a
Lieutenant-Commander in the United States Public Health Service.
Chris Zingalli, CPA, is a senior manager at Janover LLC, and one of the leaders of the firm's Digital Advisory Solutions group. Reach him at christopher.zingalli@janoverllc.com.
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.
