One of the provisions of the Coronavirus Aid, Relief and Economic Security (CARES) Act allowed employers to defer payment of the employer portion of Social Security payroll taxes due from March 27, 2020 through December 31, 2020. Payment of the deferred employment taxes are due on the following applicable dates:
- December 31, 2021 – 50% of the eligible deferred taxes are due
- December 31, 2022 – the remaining amount of eligible deferred taxes are due
An IRS notice (CP256V) will be issued to each employer that deferred its employer portion of the eligible Social Security taxes, reminding the employer of the applicable payment due dates and outlining the process to make the payments.
- Payments can be made using EFTPS (IRS preferred method), credit or debit card or check or money order.
- Payments should not be combined.
- Example 1 – if an employer is a quarterly filer, four separate payments should be made by December 31, 2021, and the quarter to which each payment relates should be identified.
- Example 2 – a self-employed individual with activity included on a Form 1040 should remit payment separate from regular tax payments. Individuals making deferred Social Security tax payments in EFTPS should select “1040 US Individual Income Tax Returns,” then “deferred Social Security tax” for the type of payment, then “2020” for the tax year.
- If either the December 31, 2021 or December 31, 2022 payments are made late, penalties will be assessed on the entire deferred balance.
Detailed guidance is linked below for your convenience:
Should you have any questions about how the repayment process works, please contact your GBQ tax professional.
Article written by:
Molly Waite, CPA
Senior Manager, Tax & Business Advisory Services
Jennifer Zimmerman, CPA
Senior Manager, Tax & Business Advisory Services
