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.
Jay Budzik is chief technology officer at ZestFinance.
Bryson Koehler is the chief technology officer at Equifax. He was previously CTO for IBM Watson and Cloud Platform, where he led a global team of cloud engineers, architects, security professionals, product and offering managers, technical communications specialists, research and development activities and operational systems reliability engineers.
With Koehler’s support, IBM reset its core strategic direction to be cloud-native and has radically advanced its cloud capabilities. By driving technical and cultural change and the way the company designed, built, and operated its core technology assets, Koehler helped accelerate IBM’s transformation. With security being a central priority for IBM, he brought all of the security teams together to ensure IBM had the world’s most compliant cloud, strengthening the company’s technical credibility.
Prior to his role at IBM Watson and Cloud Platform, Koehler was chief technology and information officer at The Weather Channel Companies (TWCC), before it was acquired in 2015 by IBM. In this position, he was responsible for setting the strategic vision, development, technical operations, financial planning and execution of all technology initiatives for TWCC. Under his leadership, the company launched its largest public, cloud-based API platform and migrated from 13 legacy data centers into a fully cloud-based company. Additionally, Koehler established leading partnerships with global technology companies such as Google, Apple, and Microsoft, as well as an independent developer network.
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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.
