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.
Kevin Robertson is the executive managing director and chief growth officer at HSA Bank, a leading provider of health savings accounts. Kevin serves as chairman of the American Bankers Association HSA Council. Kevin has 30 years of experience in banking, insurance and financial services, covering a diverse spectrum of employee benefits and insurance products and services.
In addition to his years of experience in leading business groups and managing growth organizations, he has a diverse background in operations, as well as legislative and regulatory affairs. As a frequently published author and sought-after speaker, Kevin is a recognized expert and well-known figure in the consumer-directed healthcare industry.
Sue Steel is the executive vice president of people and culture at Nearmap, a data and technology company.
Toby Bargar is a senior communications tax strategist at Avalara. As part of Avalara’s Communications Business Unit, he has spent years assisting clients with complex transaction tax issues, particularly in the field of communications tax and regulatory cost surcharges.
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.
