The Coronavirus Aid Relief and Economic Security Act (CARES Act) provides for the deferment of the employer’s share of social security tax. The current rate for the employer’s share of social security tax is 6.2% of taxable wages.  The deferral must be paid back over the next two years with 50% deposited by December 31, 2021 and the remaining 50% due by December 31, 2022. 

While employers do not need to make any election in order to take advantage of this deferral, it is important to contact your payroll service provider as soon possible to ensure proper filing of first quarter payroll tax returns.  The Form 941, Employer’s Quarterly Federal Tax Return will be revised for the second quarter of 2020 (April 2020 – June 2020). Although there was not time to revise the first quarter’s return, information will be provided shortly instructing those filing the returns on how to reflect the deferred deposits and payments otherwise due on or after March 27, 2020 for the 941 filing due April 30, 2020.

Some important items to note:

Payroll  Protection Program (PPP) Applicants and Loan Recipients

Employers who have received a PPP loan, but whose loan is not yet forgiven, may take advantage of this deferral option. Once an employer has a PPP loan forgiven, no additional deferral may incur on or after the date the PPP was forgiven. However, any deferrals up to the point of PPP forgiveness continue to be deferred and will be due on the applicable dates in 2021 and 2022.

Families First Corona Response Act (FFCRA) – Payroll Tax Credits and Employee Retention Credit

An employer who is applying for tax credits under the FFCRA for those employees on Paid Sick Leave (PSL) or Emergency Family Leave (EFL), or who is claiming an employee retention credit, is allowed to defer deposit and payment of the employer’s share of social security tax prior to determining the amount of employment tax deposits that it may retain, the advance payment it requests, or the refund calculated in anticipation of these credits.

Self-Employed

Self-employed individuals may also defer the payment of 50% of the social security tax on net earnings from self-employment income for the period beginning on March 27, 2020 and ending December 31, 2020. This deferral is made through the reduction of estimated tax payments of self-employment income.

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