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.
Prateek Vijayvergia leads the technology team at Xceedance and spearheads large-scale transformation programs across insurance functions such as underwriting, catastrophe modeling, policy service, and claims for re/insurers worldwide. He brings more than 16 years of proven property/casualty insurance domain experience in managing enterprise technology, data science, automation and insurtech initiatives.
With specialization in advancing strategic technology-driven initiatives for insurance industry participants, Prateek has successfully delivered numerous projects, including new business launch, customer-centric platform design, post-merger and separation IT consolidation, legacy platform overhaul, and geo-specific regulatory compliance. Prior to Xceedance, Prateek worked at organizations such as IBM, RBS, and Syntel, and was responsible for the design and delivery of major digital transformation programs.
Charles Marshall is a tax software consultant at Wolters Kluwer.
If the agency hadn’t revised the 1977 law now, nothing would be done for communities in need that are struggling even more in the coronavirus pandemic, writes Faith Bautista, CEO of the National Diversity Coalition.
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.
