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.
Patrick La Pine is president and CEO of the League of Southeastern Credit Unions, which serves CUs in Florida and Alabama.
Vinay Pai is an experienced technology executive with a track record of leading high-performing international organizations and driving technology transformation at scale and business growth globally. As the senior vice president of engineering at Bill.com, he leads the technology teams that develop and deliver the Bill.com product portfolio. Prior to joining Bill.com, he was SVP of engineering at First Data, where he led engineering for the Clover point-of-sale product line. Earlier, Pai held several leadership roles in the small business group during his eight years at Intuit, which he joined as part of the PayCycle acquisition. Most recently, as vice president for Intuit Developer Platform, he led the business segment responsible for the QuickBooks ecosystem of third-party applications and developers. He has also held engineering leadership roles at Cassatt, Sun Microsystems and Schlumberger, and founded a startup on the Apple platform that delivered three products.
Pay has MS electrical engineering, BS electrical engineering and BA computer science degrees from Rice University.
David Henka is CEO and President of ActiveRADAR, a company specializing in pharmacy cost reduction programs for employers, health plans, and trust funds.
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.
