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.
Spencer Lee is a New York-based technology reporter at National Mortgage News, whose coverage area spans artificial intelligence, fintech platforms and policy developments.
A reporter at National Mortgage News since 2021, Spencer has written and reported in-depth pieces ranging from marketing strategy for home lenders, affordable housing initiatives and changes artificial intelligence is bringing to the workforce. He also covers company news, particularly surrounding fintechs and the expanding niche of home equity investment platforms. Spencer regularly speaks to leading mortgage executives and policy experts,
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His notable interviews include those with Former Fannie Mae Chief Economist Doug Duncan and Lower CEO Dan Snyder. He also co-created the 2024 podcast "Getting people into affordable homes and loans"
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Matt Waters is a CPA and director of lease accounting and sustainability at CoStar Real Estate Manager. Matt Waters is a CPA with 20+ years of lease and energy accounting experience. He serves as the director of lease accounting and sustainability at CoStar Real Estate Manager and has helped over 1,000 companies streamline lease administration, lease accounting and ESG reporting. He is a leading expert in lease management and sustainability and has previously shared insights with writers from Bloomberg, Reuters and various trade publications. He is a frequent speaker at lease management, real estate and accounting events such as The CoreNet Global Summit, The NRTA National Conference, BlackLine's Beyond The Black and more. You can hear more from him on his podcast, The Lease Alert, streaming wherever podcasts are available.
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.
