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.
Jason Rahlan is the Global Head of Sustainability and Impact at Dayforce. He has previously held a number of roles in the public, non-profit, and private sectors. This includes time at Chobani, the Human Rights Campaign (HRC), the U.S. Department of State, and the U.S. House of Representatives. He is currently a member of the New York Stock Exchange (NYSE) Sustainability Advisory Council as well as a board member for the Center for Family Support (CFS) Foundation. He holds a Bachelor of Arts from American University and a Master of Science from Columbia University.
Elia Resch is director of partnerships at Digital Transformation Solutions. She is also the ecosystem acceleration lead at Cambridge SupTech Lab at Cambridge University.
Travis Hodges serves as Managing Director of Omnichannel Sales and Services at VIU by HUB, an omnichannel personal insurance brokerage platform. In this role, Hodges is responsible for leading Contact Centers, Claims, Service, Sales, Retention, and Multiple Distribution Channels for VIU by HUB.
With experience in P&C Sales at Nationwide, Hodges helped grow a $750M portfolio that includes Personal and Commercial Lines and was leader of a multi-site, multi-functional organization with P/L responsibility.
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.
