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.
Jen Cressman is the chief commercial officer at Form Health, the national leader in science-based obesity care.
Jen is a veteran of the healthcare industry, building and leading exceptional sales teams at dynamic, innovative companies. Jen has been leading Form Health through rapid commercial growth since May 2023, focusing on leveraging the physician-led, science-based obesity care model to guide clients through the challenges and opportunities of GLP-1s.
Nishaad Ruparel is the president of Ascend, a Top 50 Firm formed in 2023 with capital from Alpine Investors, a private equity firm based in San Francisco. Prior to joining Ascend, he was recruited by Alpine Investors to help launch a new investment strategy; prior to joining Alpine, he spent time at AEA, an upper middle market PE firm based in New York, and at JP Morgan, where he serviced private equity clients out of the firm's investment banking division. He holds an MBA from Stanford University and a BS in Finance from New York University's Stern School of Business.
Eileen Connor is the president and executive director of the Project on Predatory Student Lending.
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.
