The IRS has released following information concerning the repayment of the deferred payroll taxes for the calendar year 2020. The information was contained in their e-news for payroll professionals issue number 2021 – 08.
The Coronavirus, Aid, Relief and Economic Security Act – CARES Act – allowed employers to defer withholding and payment of the employee’s Social Security taxes on certain wages paid in calendar year 2020.
Repayment of the employee’s portion of the deferral started January 1, 2021, and will continue through December 31, 2021. 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.
Employers can make the deferral payments through the Electronic Federal Tax Payment System (EFTPS) or by credit/debit card, money order or with a check. These payments must be separate from other tax payments to ensure they are 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.
Also, there are special considerations in repaying the deferred taxes when an employer uses a third party payer that files aggregate Forms 941 and 943 under its own EIN.
Check out this IRS Tax Tip for more information on third party payers and deferred taxes, and learn about:
- Important dates associated with the deferred taxes
- How to make payments for deferred tax reported by third party payer aggregate filers