2020 Payroll Tax Deferral Installment due December 31

Employer portion of 2020 deferred payroll payments due

Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, employers were allowed to defer payment of certain 2020 payroll taxes until 2021 and 2022. For employers that elected to do so, the first half of the deferred amount is due December 31, 2021 and the second half is due December 31, 2022.


How to repay the deferred taxes


Employers can make the deferral payments through the Electronic Federal Tax Payment System or by credit or debit card, money order or with a check. These payments must be separate from other tax payments to ensure they are applied to the deferred payroll tax balance. IRS systems won't recognize the payment if it is with other tax payments or sent as part of a payroll tax deposit.


The employer should select deferral payment and then change the date to the applicable tax period for the payment.


How to avoid federal tax deposit penalties


The IRS has stated in unofficial guidance that employers can avoid the federal tax deposit penalty only if the deferred taxes are paid timely and fully by December 31, 2021 and 2022. If an employer fails to make any portion of the payment timely, the full balance of the deferred taxes will be subject to the 10% federal tax deposit penalty, regardless if a portion of the deferred amounts were timely paid.