The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act” (Public Law 116-136)) allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax from March 27, 2020 (the date of its enactment) through December 31, 2020, that they otherwise would be responsible for paying to the federal government with respect to their employees. Employers generally are responsible for paying a 6.2-percent Social Security tax on employee wages.

This provision requires that the deferred employment tax be paid in 2021 and 2022, with 50% of the amount required to be paid by December 31, 2021, and the other half by December 31, 2022.  As originally enacted, this provision did not apply to any employer that had certain loans forgiven that were made under the Small Business Act (15 U.S.C. 636(a)), or certain loans forgiven under the CARES Act (e.g., so-called “Paycheck Protection Program” (“PPP”) loans).  However, the Paycheck Protection Program Flexibility Act of 2020 (Public Law No 116-142) recently amended the CARES Act to eliminate the exception noted above that applied if such loans were forgiven.  As such, PPP loan recipients now can take advantage of the additional time to pay the employment share of Social Security tax for its workforce. This amendment applies as if it were in the original version of the CARES Act.