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.
Charles Lee, MD, has been a leading national advocate for simplifying and making medical information more understandable for patients. He is senior advisor on health literacy and language barriers at First Databank. In 2001 he started Polyglot Systems with a mission to develop practical, affordable multi-language technology solutions to improve healthcare access and reduce disparities for underserved and limited English proficient patient populations.
Mitch Doust is Executive Vice President and Head of the Americas for CoverGenius, where he is responsible for the establishment and growth of the XCover platform and the broader Cover Genius business across North America, Canada and Latin America. Mitch recently joined Cover Genius from leading insurtech company Trov (www.trov.com), where he was Global Head of Business Development and led the establishment of Trov's global network of insurance partnerships. Prior to his move into technology, Mitch began his career with EY in Australia before moving to the Suncorp Group (one of Australia’s leading insurers) where he held a number of strategic roles including P&C strategy, venture investing and strategic innovation. Mitch also serves as an independent advisor at Anthemis Group
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.
