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.
Christopher Strand leads Carbon Black’s global security risk and compliance program strategy. With more than 20 years of information technology and security assessment experience, Chris oversees the development of enterprise platforms that help organizations deploy proactive security and compliance solutions. Throughout his career he has concentrated on refining a framework that bridges the gap between security policy and cyber-regulatory requirements, while helping to maintain, measure, and improve enterprise risk posture. Previously, Strand held security/compliance positions at Trustwave, Tripwire, EMC/RSA, and Compuware.
Angel Bennett is the assistant vice president of paid leave at Unum, a leading employee benefits and leave services provider.
Kevin Fromer is president and CEO of the Financial Services Forum, which represents the eight largest, most diversified U.S. banking institutions. Previously, Fromer was the executive vice president and head of public affairs for HSBC North America Holdings, where he was responsible for public policy and government affairs at the federal and state levels. Fromer spent over two decades in U.S. federal government, including as assistant secretary of the Treasury for legislative affairs from 2005-2009.
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.
