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Employer and Self-Employed Repayment of Deferred Payroll Taxes

To help cash flow during the pandemic, the Coronavirus, Aid, Relief and Economic Security (CARES) Act allowed employers to defer payment of the 6.2% employer's share of Social Security tax and also allowed self-employed individuals to defer payment of a portion of their SECA tax for March 27, 2020, through Dec. 31, 2020.  The IRS has provided guidance on how and when to repay at: https://www.irs.gov/newsroom/how-self-employed-individuals-and-household-employers-repay-deferred-social-security-tax.

Repayment of half the amount is due at the end of this year and the other half is due by the end of 2022.  Because Dec. 31, 2021, is a holiday, payments this year are due by Jan. 3, 2022.  Care should be taken to ensure that the repayment is properly credited to the deferred payroll or SECA balance. Payment should be made separately and not combined with other tax payments, and checks should be noted on the check memo line “Deferred 2020 Social Security tax” or “Deferred 2020 SECA tax.” 

Payments can be made using the Electronic Federal Tax Payment System or by credit or debit card, money order or with a check. In EFTPS, select “Deferral Payment” for employers, and select deferred Social Security for self-employed individuals.  Employers can visit EFTPS.gov, or call 800-555-4477 or 800-733-4829 for details.

What employers need to know about repayment of deferred payroll taxes

IRS Notice 2020-65

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