COVID Tax Tip 2021-32: What employers need to know about repayment of deferred payroll taxes

IRS Tax Tips March 10, 2021
Useful Links: IRS.gov Help For Hurricane Victims News Essentials What's Hot News Releases IRS - The Basics IRS Guidance Media Contacts Facts & Figures Around The Nation e-News Subscriptions The Newsroom Topics Multimedia Center Noticias en Español Radio PSAs Tax Scams/Consumer Alerts The Tax Gap Fact Sheets IRS Tax Tips Armed Forces Latest News IRS Resources Compliance & Enforcement News Contact Your Local IRS Office Filing Your Taxes Forms & Instructions Frequently Asked Questions Taxpayer Advocate Service Where to File IRS Social Media	Issue Number: COVID Tax Tip 2021-32 What employers need to know about repayment of deferred payroll taxes To give people a needed temporary financial boost, the Coronavirus, Aid, Relief and Economic Security Act allowed employers to defer payment of the employer's share of Social Security tax. IRS Notice 2020-65 allowed employers to defer withholding and payment of the employee's Social Security taxes on certain wages paid in calendar year 2020. Employers must pay back these deferred taxes by their applicable dates.  The employee deferral applied to people with less than $4,000 in wages every two weeks, or an equivalent amount for other pay periods. It was optional for most employers, but it was mandatory for federal employees and military service members.  Repayment of the employee's portion of the deferral started Jan. 1, 2021 and will continue through Dec. 31, 2021. Payments made by Jan 3, 2022, will be timely because Dec. 31, 2021, is a holiday. The employer should send repayments to the IRS as they collect them. If the employer does not repay the deferred portion on time, penalties and interest will apply to any unpaid balance. Employees should see their deferred taxes in the withholdings from their pay. They can check with their organization's payroll office for details on the collection schedule. How to repay the deferred taxes Employers can make the deferral payments through the Electronic Federal Tax Payment System or by credit or debit card, money order or with a check. These payments must be separate from other tax payments to ensure they applied to the deferred payroll tax balance. IRS systems won't recognize the payment if it is with other tax payments or sent as a deposit. EFTPS will soon have a new option to select deferral payment. The employer selects deferral payment and then changes the date to the applicable tax period for the payment. Employers can visit  EFTPS.gov, or call 800-555-4477 or 800-733-4829 for details. If the employee no longer works for the organization, the employer is responsible for repayment of the entire deferred amount. The employer must collect the employee's portion using their own recovery methods.   More information: Notice 2020-65 Notice 2021-11 Paying taxes Share this tip on social media -- #IRSTaxTip: What employers need to know about repayment of deferred payroll taxes. https://go.usa.gov/xsyem   Back to Top         Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov. This message was distributed automatically from the IRS Tax Tips mailing list. Please Do Not Reply To This Message.

 

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