CARES Act Allows Delay of Employer Payroll Tax Payments

Kilpatrick Townsend & Stockton LLP

An employer is responsible for paying its share (6.2 percent) of Social Security taxes and its share (1.45 percent) of Medicare taxes for each employee’s covered wages.  Generally, an employer must deposit such amounts to the U.S. Treasury electronically either semi-weekly or monthly. The CARES Act will allow employers (and self-employed individuals),  to defer paying their portion of the Social Security payroll tax (6.2 percent) otherwise due with respect to wages accrued between March 27, 2020 and December 31, 2020. The deferred amounts will ultimately have to be paid to the U.S. Treasury in two installments. Half of the deferred amount of payroll taxes from 2020 will be due December 31, 2021, with the remaining half due December 31, 2022.

The above delay provisions apply to all employers regardless of size.  However, employers who receive Small Business Act loans that are forgiven under the CARES Act (so that the Federal government effectively gave them cash—that they did not have to repay —to fund as much as eight weeks of their payroll costs) are not eligible for this payroll tax deferral.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Kilpatrick Townsend & Stockton LLP | Attorney Advertising

Written by:

Kilpatrick Townsend & Stockton LLP

Kilpatrick Townsend & Stockton LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.