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Client Update: IRS Reminds Employers of Upcoming Deadline for Deferred Social Security Tax

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

The IRS is reminding employers and self-employed individuals that opted to defer paying part of the 2020 Social Security tax liability that the second installment is due December 31, 2022 [IR 2022-220, 12/14/2022].

Background.

The Coronavirus, Aid, Relief and Economic Security (CARES) Act allowed employers to defer the deposit and payment of the employer’s share of Social Security (SS) taxes and self-employed individuals to defer payment of certain self-employment taxes. 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. If any portion of the employer’s share of Social Security tax is not deposited or paid by the applicable date, penalties and interest will apply. See Payroll Guide ¶20,908.

Courtesy notices.

The IRS mailed courtesy notices to taxpayers. The release notes, however, regardless if a taxpayer receives a notice, the amounts must be paid be on time.

Where to pay.

Payments may be made online or by check or money order.

  • EFTPS.  From the Tax Type Selection screen, select “Deferred Social Security Tax” and then change the date to the applicable tax period (the calendar quarter in 2020 for which tax was deferred).
  • Direct Pay. Self-employed individuals can use Direct Pay to pay from a checking or savings account. Select the “Balance Due” reason for payment and apply the payment to the 2020 tax year where the payment was deferred.
  • Debit card, credit card or digital wallet. To pay by debit card, credit card or digital wallet (e.g. PayPal), select “installment agreement” and apply the payment to the 2020 tax year where the payment was deferred.
  • Check or money order. Payments by check or money order should be sent to the mailing address used to file Form 941.

Due date.

The IRS has stated that payments submitted by January 3, 2023 will be considered timely due to December 31, 2022 falling on a Saturday. Taxpayers can also pay the deferred amount at any time before the due date. See Payroll Update, 07/11/2022 for further details.

 

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