Consolidated Appropriations Act of 2021: Payroll Tax Deferral Extension

The Consolidated Appropriations Act of 2021 was signed into law on December 21, 2020. The Act extended timeframes related to the Presidential Memorandum and Executive Order whereby the President directed the Secretary of the Treasury to allow for the deferral of the employee-portion of payroll taxes withheld under IRC Section 3101(a) (6.2% for Old-Age, Survivors and Disability Insurance) on wages earned during the period of September 1, 2020 through December 31, 2020 (“Deferral Order”). 

Specifically, the Act extended timeframes so that withholding taxes that have been withheld may be repaid, ratably, between January 1, 2021 and December 31, 2021, and so that penalties and interest will not begin to accrue on any unpaid amounts until January 1, 2022. For more information on the Deferral Order, including application and guidance, please see the prior alert here.