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.
Kim Conaway, CPA is a Product Manager for the Accounting and Audit Solutions. Kim has been with CCH
since 2003. During her time at CCH Kim spent almost six years on the Engagement Training and
Consulting Team helping hundreds of accounting firms improve their processes through technology and
efficient audit techniques. This experience gives Kim a unique understanding of the needs and best
practices for firms of all sizes in her current role as and the Product Manager for Engagement,
Engagement Organizer, Knowledge Coach and TeamMate Analytics. Prior to joining CCH Kim spent over
four years in public accounting working for two local Pittsburgh firms focusing primarily on audits,
reviews and compilations of commercial, not for profit, and governmental entities.
Erwann is a leader of McKinsey's North American Insurance Practice. He brings 20 years of experience defining and executing value creation strategies and at-scale impact to his clients on topics of transformation, resilience, risk management, organizational effectiveness, risk culture, behavioral economics and decision making. He is passionate about developing and applying (digital) innovations to improve business competitiveness and public sector service.
Award-winning author of seven books, he has been recognized by the World Economic Forum as one of the most extra-ordinary leaders of the world under 40. Before joining McKinsey, Erwann held senior positions at leading corporations, non-for-profits, international organizations, and academic institutions on several continents.
Steven J. Eller is a partner at Top 100 Firm PKF O’Connor Davies and is co-head of the state and local tax practice. He has over 30 years of professional experience assisting individuals, businesses, and estates and trusts in planning and complying with tax rules and regulations.
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.
