Employers and self-employed individuals that chose to defer paying part of their 2020 Social Security tax liability under the CARES Act must make their second annual installment to pay off the remaining balance by December 31, 2022. Half of the deferred Social Security tax was due by December 31, 2021, and the remainder is due by December 31, 2022.
The employer may pay the amount it owes electronically using the Electronic Federal Tax Payment System® (EFTPS), by credit or debit card, or by check or money order. The preferred method of payment is EFTPS. Taxpayers should make their repayments of deferred Social Security taxes separate from other tax payments, and they should designate the payments as “deferred Social Security tax.”
If a taxpayer fails to repay any portion of the deferred taxes timely, then the deferral is disallowed, and the entire amount of deferred taxes are subject to failure-to-deposit penalties under IRC §6656. In other words, the entire amount of deferred tax is automatically charged the 10% penalty for failure to deposit payroll taxes for more than 15 days. (IRC §6656(b)(1)(A)(iii)) This is true even if the taxpayer timely paid the first half in 2021 but fails to timely pay the second half in 2022.
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