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.
Shari Dodgen is the Director of Strategic Relationships and Product Marketing for Mid/large firms at Wolters Kluwer Tax & Accounting North America. She is responsible for defining the overall product marketing strategy for the company’s award-winning professional software products, as well as building and expanding strategic relationships with professional associations and accounting organizations to drive increased value to individual firms.
In addition to her 12 years as publisher of Cygnus Business Media’s CPA Technology Advisor, Shari has extensive experience developing integrated custom media programs and expertise in business-to-business communications, including strategic planning, partnership development, program execution, marketing and sales.
Jim McGinnis is EVP and General Manager for the Professional Market of Wolters Kluwer’s Tax and Accounting North America business unit. In this role, he is responsible for the CCH solutions including CCH Axcess Suite, CCH ProSystem fx as well as ATX Professional Tax.
Prior to Wolters Kluwer, Jim held a variety of roles as Vice President at Intuit including marketing for the then Accountant’s Professional Division, leader of the Accountant Segment for QuickBooks, and Product Management for Lacerte and ProSeries.
Amanda Wilkie, a consultant at Boomer Consulting, Inc., has a computer science background, but she’s not your average geek. With two decades of technology experience, Amanda has spent 13 years driving change and process improvement through innovative technology solutions working across firms of varying sizes in the public accounting profession. She has held strategic leadership positions in firms ranging from Top 50 to Top 10 including her most recent role as CIO of a Top 30 firm. Wilkie is a recognized expert in the profession who regularly speaks and writes on blockchain and cryptocurrency and their impact on the profession.
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.
