Yesterday the IRS released 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.
 
As previously blogged about here, the IRS issued Notice 2020-65 on August 28, 2020 in response to a presidential memorandum giving employers the option to defer certain employees' Social Security taxes from September 1, 2020, to December 31, 2020. Any taxes deferred under Notice 2020-65 are withheld and were to be paid ratably from employee wages in Q1 of 2021.
 
However, the Consolidated Appropriations Act, 2021, signed into law on December 27, extended the period that the deferred taxes are withheld and paid ratably. The period is now for the entire year − from January 1, 2021, through December 31, 2021. Notice 2021-11 makes changes to Notice 2020-65 to reflect this extended period. According to the IRS, if the deferred payments are made by January 3, 2022, they will be considered timely because December 31, 2021, is a legal holiday. Penalties, interest and additions to tax will begin to accrue on January 1, 2022, if payment is not made by January 3, 2022.
 
The payroll tax deferral is complicated. It is critical that you engage your tax advisor to discuss how the payroll tax deferral program and repayment may affect your business.
 

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