Reminder: Deferred payroll taxes to be repaid by year-end

Those employers who took advantage of deferring the employers’ portion of Social Security taxes under the Covid-relief CARES Act last year must repay 50% of the deferred amount by Dec. 31, 2021.

The CARES Act – Coronavirus, Aid, Relief and Economic Security Act – codified former President Trump’s Presidential Memorandum issued in August 2020 in which employers were permitted to defer the deposit and payment of the employer’s share of Social Security taxes and for self-employed individuals to defer payment of certain self-employment taxes. Subsequently the IRS issued guidance stating that employers who opted to do this would be responsible for repaying those taxes.

As a reminder:

  • The deferral applies to those taxes for the period March 27, 2020, through December 31, 2020.
  • Employers must pay 50% of the amount eligible to be deferred by December 31, 2021, and the remaining deferred tax by December 31, 2022.
  • Payments made by January 3, 2022, will be considered timely because December 31, 2021, is a holiday.

Employers who use a payroll company and who opted to defer payroll taxes during the allowable time frame should coordinate with the payroll company to pay the deferred taxes owed by the December 31, 2021, and December 31, 2022, due dates. Remember that the payment of the deferred taxes is the sole responsibility of the employer.

You can learn more by visiting the IRS website. Please let us know if you have any questions.

Karen Couch is an Accounting Manager and Team Leader with our Financial Accounting Services Team. She can be reached at kcc@antarescpas.com.