How to Repay Deferred Employer Social Security Taxes
To give employers a much-needed temporary financial boost, the Coronavirus, Aid, Relief, and Economic Security (CARES) Act of 2020 allowed employers to defer payment of the employer's share of Social Security tax.
For participating employers, each quarter the IRS has sent Letter 3064C to remind employers of their balance due. Employers who deferred the employer portion of social security must pay at least half of the total deferred amount by December 31, 2021. The remaining portion will be due by December 31, 2022.*
Ways to make your deferral payment
- Electronic Federal Tax Payment System (EFTPS)
- Credit card
- Debit card
- Money order
- Check
These deferred social security repayments must be paid separately from other payroll tax deposits or tax payments to ensure they are applied appropriately to the deferred payroll tax balance due. IRS systems are unable to recognize and apply the payment if it is submitted with other tax payments or sent as a deposit.
EFTPS is the preferred method and includes a deferral payment option. Employers should select deferral payment and then change the date to the applicable tax period for the payment.
*CBIZ does not track Social Security Tax repayment amounts on behalf of the employer. Employers should set up a reminder so that the repayment is made on time. If any portion of taxes deferred under CARES Act Section 2302 is not deposited by the applicable due date, the deferral of the deposit due date is invalidated for all of the employer’s deferred tax, not just the remaining delinquent portion. A Section 6656 penalty for failure to deposit taxes is applicable for the entire deferred amount. For example, if an employer defers a total of $50,000 for the 2020 tax period, and pays $25,000 on December 31, 2021, but fails to make any additional deposits or payments by December 31, 2022, the employer is liable for a penalty on the entire $50,000. These penalties can be substantial and will not be eligible for abatement.