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.
Ray Walsh leads InvoiceCloud's insurance vertical, helping property and casualty carriers modernize the way they bill, collect, and disburse payments to policyholders. He brings deep experience in enterprise SaaS sales and go-to-market leadership, having previously served as Vice President of Enterprise Sales at Brightcove and Senior Vice President of Global Sales at TransAct Technologies, where he led global sales strategy across restaurant and gaming solutions.
Robert Vane is the co-founder of the Q6FSA Method for Global Information Management, a freelance full enterprise scope data architect “with over 25 years experience of getting it all wrong, now dedicated to solving the foundational root causes of failure within the information management space and getting it all right.”
Kyle Schmitt is the managing director of J.D. Power’s Global Insurance Intelligence Group. He leads a team that develops and applies competitive intelligence from a combination of proprietary and multi-source data to help clients uncover opportunities, optimize operational investment initiatives and measure balanced project returns. Prior to joining J.D. Power, he spent more than 10 years advising US and international insurers on growth, market and M&A strategies. He most recently led growth and strategy for Life, Auto and P&C Claims business units at State Farm. Prior to State Farm, he was an Investment Banker based in London advising global life and P&C insurers on M&A and capital optimization. He is based in Chicago.
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.
