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January 20, 2021 at 11:55 AM
(Credit: Allison Bell/ALM)
The Internal Revenue Service released guidance Tuesday via Notice 2021-11 addressing how employers who elected to defer certain employees’ taxes can withhold and pay the deferred taxes throughout 2021 instead of just the first four months of the year.
In response to a presidential memorandum signed Aug. 8, 2020, Notice 2020-65 was issued on Aug. 28, giving employers the option to defer certain employees’ Social Security taxes from Sept. 1 to Dec. 31, 2020.
“This applied to employees 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% of employees’ wages,” the IRS states.
Any taxes deferred under Notice 2020-65 are withheld and paid ratably from employee wages between Jan. 1, 2021, until April 30, 2021.
However, the Consolidated Appropriations Act 2021, signed into law Dec. 27, extended the period that the deferred taxes are withheld and paid ratably.
