fbpx

< Back to Thought Leadership

Deferred Payroll Tax Payments

Employers who made the election to defer 2020 social security tax payments per provided CARES Act relief issued in March of 2020 are required to remit the first repayment by December 31, 2021. The second portion can continue deferral until December 31, 2022. To avoid penalties and interest, at least half of the total deferred payroll taxes need to be remitted by December 31, 2021.

A failure-to-pay and failure-to-deposit penalties may come into play for any untimely or inadequate payments. Per released IRS guidance, penalties are due on the full amount of deferred taxes if the first or second repayment are not remitted by deadlines and payments are less than the required scheduled amount. The first payment is due by December 31, 2021, and must equal at least 50% of total taxes deferred. The second payment is due by December 31, 2022 and must close the remainder of the deferred taxes balance.

For example, if total deferred taxes are $100,000, then a 2% failure-to-deposit penalty will be due on $100,000 if 50% payment is not remitted and payment is more than one day past December 31, 2021. Failure-to-deposit penalties can climb up to 10% if payment is 15 or more days delinquent. The same principle applies for next year’s final repayment. This penalty example does not include any failure-to-pay assessments or late payment interest that could also be assessed by the IRS.

Companies can make payments electronically via credit card, direct debit or by check/money order. If the company files a quarterly Form 941, the payment should be applied to related quarter. This means multiple separate payments may need remitted if the deferred taxes cover different calendar periods. If an annual payroll return is filed (Form 943 or 944) then payments can be applied to the year 2020.

Additional details can be found from the IRS here. If you have any questions, please contact your local Blue & Co. advisor.

 

 

 

2027 Medicare Geographic Reclassifications | photo of woman's hand typing near stethoscope

2027 Medicare Geographic Reclassifications

Hospitals that submit wage index data have the opportunity to request geographic reclassification. For facilities that qualify, they can experience significant increases in both base Diagnosis-Related Group (“DRG”) and Outpatient […]

Learn More
Positive Outcomes of Implementing Network Integrity Analysis | Part Three of a Four Part Series | Text overlay on a photo of a hospital.

Positive Outcomes of Implementing Network Integrity Analysis

Network Integrity is the ability to keep patients within the organization-defined provider network. In our last video and article, we discussed a case study and how the health system used Network […]

Learn More
cryptocurrency for not-for-profits

Fundraising Expenses: Know the Rules, And Your Options

By Rick Shields, CPA, Principal at Blue & Co. One of the issues not-for-profits must address is how to raise funds while also properly reporting the associated costs for donor […]

Learn More