Seyfarth Synopsis: On January 19, 2021, the Internal Revenue Service (“IRS”) issued guidance (the “Guidance”) in accordance with the recently enacted COVID-related Tax Relief Act of 2020 (the “Act”) extending the payment period for employee payroll taxes deferred pursuant to the Presidential Memorandum of August 8, 2020 as implemented by the IRS in Notice 2020-65 (the “Previous Notice”) until December 31, 2021.

The Guidance does not address any of the outstanding questions we previously pointed out here.

The IRS issued the Previous Notice to implement the Presidential Memorandum which directed the Secretary of the Treasury to defer the withholding and payment of certain employee payroll taxes. Under the Previous Notice, employers are allowed to defer the withholding and payment of the employee portion of social security tax (but not Medicare tax, which must still be withheld and paid) on certain qualifying wages paid during the period of September 1, 2020, through December 31, 2020. The Previous Notice further provided that an employer that defers such payroll taxes must withhold and pay all of the deferred taxes ratably from the employee’s wages that are paid during the period January 1, 2021 through April 30, 2021 (the “Payment Period”). If the employer were not to pay all the deferred payroll taxes by May 1, 2021, interest, penalties and additions to tax would begin to accrue on the unpaid taxes.

In the Act, Congress instructed the Secretary of Treasury to extend the Payment Period through December 31, 2021. Accordingly, the Guidance modifies the Previous Notice by providing that the Payment Period is the period from January 1, 2021, through December 31, 2021, and that any amounts unpaid by January 1, 2022, will begin to accrue interest, penalties and additions to tax.

You can read Notice 2021-11 (the "Guidance") here.