Update: Deferral of Employment Tax Deposits and Payments through December 31, 2020
Articles by: Richey May, Apr 15, 2020
(Relationship to Paycheck Protection Program Loans [PPP])
The IRS provided additional guidance in the form of Frequently Asked Questions and Answers.
In this guidance, the IRS clarified that employers who have received, or expect to receive a PPP loan, “may defer deposit and payment of the employer’s share of social security tax that otherwise would be required to be made beginning on March 27, 2020, through the date the lender issues a decision to forgive the loan in accordance with paragraph (g) of section 1106 of the CARES Act, without incurring failure to deposit and failure to pay penalties. Once an employer receives a decision from its lender that its PPP loan is forgiven, the employer is no longer eligible to defer deposit and payment of the employer’s share of social security tax due after that date.”
The amount of the deposit and payment of the employer’s share of social security tax that was deferred through the date that the PPP loan is forgiven continues to be deferred. The employer must deposit 50% of the payroll taxes that are deferred on or before December 31, 2021 and the remaining 50% must be deposited on or before December 31, 2022 in order to be considered as timely made. If no PPP loan is received or if there is no forgiveness of the PPP loan, an employer can defer the deposit and payment of the employer’s share of payroll tax on payroll through December 31, 2020. Self-employed taxpayers may also defer 50% of the Social Security portion of self-employment taxes (i.e. – 6.2%) in their payments of estimated tax.
If you have any questions about the PPP Program or SBA Loans, contact us. We’re here to help you navigate COVID-19 relief.