Reminder: Late Repayment of Deferred Payroll Taxes Could Carry Harsh Penalties, Dec. 16, 2021

Many small business clients elected to defer payroll taxes under the CARES Act relief. 50 percent of those deferred payroll taxes are due December 31, 2021 and the remaining 50 percent are due December 31, 2022. As a reminder, the IRS PMTA 2021-07 states the IRS' position that a late payment makes the entire amount deferred subject to a 10 percent penalty for failure to deposit (rather than applying the penalty only to the 50 percent that is due December 31, 2021). Late payment of the amount due December 31, 2021 would also accelerate the due date for the December 31, 2022 payment. If the IRS demands repayment and repayment is not made within 10 days, the penalty increases to 15 percent. Business owners who were planning to use the funds withheld for the employee retention tax credit should also be reminded that the credit ended early and is no longer available for fourth quarter wages. For more information on the payroll tax deferral option, see Q .