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.
Gavin John is founder and CEO of StoneShot, an email marketing and event management platform and provider.
Amy Hollis is known as one of the top industry experts in the design, implementation, marketing, communications and enrollment of voluntary benefit programs, predominantly within the large employer market. She has more than 20 years of benefits experience, and while her most recent focus has been in voluntary benefits, she also has broad based experience ranging from core benefits, employer-paid plans, exchange strategy and comprehensive benefit delivery & administration.
During her career, Amy created then led highly successful voluntary benefit practices for preeminent benefit consulting firms, including Willis Towers Watson, Conduent (formally Buck Consulting / Xerox) and Marsh and McClennan. She has developed nationally recognized teams at each of these organizations that continue to drive the industry. Over the last decade, she has been engaged either directly or through her team as the lead strategist in the overall design, provider selection and successful implementation of voluntary benefit programs for over one-third of the Fortune 250 companies.
Amy’s primary focus, based on her experience in the core and voluntary benefit spectrum, is to assist employers in optimizing over-arching total reward strategies and cost-saving measures by effectively and creatively linking employer and employee-paid benefit strategies. Her expertise includes thought leadership in strategy, plan design, development and evaluation of the full spectrum of voluntary plans, as well as supporting cost management strategies through the resources inherent to the delivery of voluntary plans.
Angaj Bhandari is India and South Asia country manager at FIME.
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.
