CTAS - Deferral of Social Security tax

Employee Deferral

The Coronavirus, Aid, Relief, and Economic Security Act (CARES Act) allowed employers to defer the withholding, deposit, and payment of employee Social Security (6.2%) tax for the last four months of 2020. Instructions on how to account for the employee deferral in CTAS available in the following document:

CTAS Payroll Instructions for Deferring Employee Federal Social Security Payroll Taxes (pdf)

The deferral period is September 1 through December 31, 2020.  Starting January 1, 2021, through the end of December 2021, the employee deferred social security tax would have to be collected from the employee and paid back ratably over that period by the employer.  Any penalty of nonpayment is deferred until January 1, 2022. 

Please note that the deferral applies to any employee whose pretax wages or compensation during any biweekly pay period is less than $4,000, or the equivalent threshold amount with respect to other pay periods. There are many things to consider if an employer chooses to participate in this program and should be fully aware of all the requirements.  Please see below for links to some resources.

Employer Deferral

The CARES Act (Section 2302) allowed employers to defer the deposit and payment of the employer’s share of Social Security taxes.  The payroll tax deferral period began March 27, 2020 and ended December 31, 2020.  More details can be found on the IRS website about this deferral at:  https://www.irs.gov/newsroom/employers-can-withhold-make-payments-of-deferred-social-security-taxes-from-2020   If you have questions, please contact the CTAS helpline at ctas@osa.state.mn.us or 651-296-6262.

Resources

IRS Notice 2020-65:  https://www.irs.gov/pub/irs-drop/n-20-65.pdf

IRS Notice 2021-11: Modification to IRS Notice 2020-65: https://www.irs.gov/pub/irs-drop/n-21-11.pdf 

IRS Deferral of employment tax deposits Q & A:  https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-2020   

IRS Guidance deferring certain employee Social Security tax withholding:  https://www.irs.gov/newsroom/guidance-issued-to-implement-presidential-memorandum-deferring-certain-employee-social-security-tax-withholding