The IRS has issued steerage (Discover 2021-11) to handle how employers who elected to defer sure workers’ payroll taxes can withhold and pay the deferred taxes all through 2021 as a substitute of simply the primary 4 months of the yr.
Discover 2020-65 gave employers the choice to defer sure workers’ Social Safety taxes from Sept. 1, 2020, to Dec. 31, 2020. This utilized to workers paid lower than $four,000 each two weeks, or an equal quantity for different pay intervals, with every pay interval thought of individually. The worker portion of Social Safety taxes (Previous Age, Survivors, and Incapacity Insurance coverage, or OASDI) are calculated at 6.2% of workers’ wages (IRS Information Launch IR-2021-17).
Underneath the Consolidated Appropriations Act, 2021, P.L. 116-260, the tip date of the interval throughout which employers should withhold and pay relevant taxes (outlined as the worker share of Social Safety tax below Sec. 3102(a) or the Railroad Retirement Tax equal below Sec. 3202(a)) is postponed from April 30, 2021, to Dec. 31, 2021. Because of this, any related curiosity, penalties, and additions to tax for late fee of any unpaid relevant taxes will start to accrue on Jan. 1, 2022, reasonably than on Might 1, 2021.
Any taxes deferred below Discover 2020-65 have been to be withheld and paid ratably from worker wages between Jan. 1, 2021, till April 30, 2021. Nonetheless, the Consolidated Appropriations Act, 2021, signed into regulation Dec. 27, prolonged the interval that the deferred taxes are withheld and paid ratably. The interval is now for your complete yr — from Jan. 1, 2021, by Dec. 31, 2021.
Discover 2021-11 amends Discover 2020-65 to mirror this prolonged interval. Funds made by Jan. three, 2022, might be thought of well timed as a result of Dec. 31, 2021, is a authorized vacation. Penalties, curiosity, and additions to tax begin on Jan. 1, 2022, for any unpaid balances.
— Sally P. Schreiber, J.D., ([email protected]) is a JofA senior editor.