Deferral of tax deposits and payments

The CARES Act has provided the deferral of employment tax deposits and payments.

Section 2302 of the CARES Act states that employers can defer the deposit and payment of employment taxes (FICA portion only). The deferral applies to the employer’s share of social security taxes they would otherwise be required to pay from March 27, 2020 to December 31, 2020. The Form 941, Employer’s quarterly federal tax return will be revised for the second calendar quarter. More information will be provided in the near future.

Employers must deposit 50 percent of the deferred amount by December 31, 2021 and the remaining amount by December 31, 2022. If the employer makes the deposits by these dates, they will avoid a failure to deposit penalty.

It is important to note, that employers the received a Paycheck Protection Program loan may not defer the deposit and payment that is otherwise due after the employer receives a decision from the lender that the loan was forgiven. If you have applied and not yet received the decision that the loan has been forgiven, then the deferral may still apply.

Self-employed individuals are also eligible for the deferral. They can defer the payment of 50 percent of the social security tax on net earnings from selfemployment income from the period of March 27, 2020 to December 31, 2020.

The IRS has created a helpful Q&A for guidance on this notice. Please reach out if you have any questions.