Beginning April 2020, the CARES Act will allow all employers to defer payment of the 6.2% employer Social Security tax (EMP1) through December 31, 2020. Deferred tax amounts would be paid in equal amounts over two years, with payments due on December 31, 2021 and December 31, 2022.
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. As long as Employer Social Security Tax deposits are made in accordance with the above schedule, no penalty will be imposed.
There are two caveats to this provision. First, the deferral does not apply if the taxpayer had indebtedness forgiven under Section 1106 (re: loan under the Small Business Act) or Section 1109 (re: US Treasury Program Management Authority) of the Act. Second, if a third party or agent is used to pay the wages (whether or not the third party is a Certified Professional Employer Organization), and the employer avails of the benefits of this deferral provision, then the employer (not the third party) will be solely responsible for paying the Employer-Side Social Security Tax for Deferral Period.
Provisions are outlined in CARES Act, Section 2302 – Page 71.
Payrolls processed in e3 will continue calculating employer Social Security tax, and we will impound these funds (if already doing so), unless otherwise notified by you through a support ticket to firstname.lastname@example.org.
Note: If you elect to defer the employer portion of Social Security tax for the remainder of the year we are able to do so on a prospective basis; we will not be able to defer the employer Social Security taxes for payrolls that have already been processed.