The CARES Act: Delay of Payment of Employer Payroll Taxes

Published on: 04/02/2020 By: Gorfine, Schiller & Gardyn

A provision in the recently enacted CARES Act was included to alleviate some of the burden of retaining and paying employees during this difficult time.

Generally, employers are required to pay in the employer’s share (6.2%) of the Social Security tax on a semi-weekly or monthly basis. The CARES Act allows employers and self-employed individuals to defer paying their portion of the Social Security taxes incurred from March 27, 2020 through December 31, 2020.

Those taxes would then be due in two installments:

  1. 1. 50% due December 31, 2021
  2. 2. Remaining 50% due December 31, 2022

As long as the deferred payroll taxes are paid by the extended due dates, the employer will be treated as having made these payments on time and no interest or late payment penalties will be assessed.

Please note that this does not apply to the employer’s share (1.45%) of the Medicare tax. Those payments still need to be made on time, as well as depositing the employee’s withholdings.

In addition, if an employer has received any Small Business Act loans that are forgiven under the CARES Act, they are not eligible for this payroll tax deferral.

For more information and questions regarding this new provision under the CARES Act, contact us.

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