Amount of Payroll Tax Deposits Under the CARES Act
The article was update May 4, 2020.
The amount of payroll taxes required to be deposited by employers has been affected by various provisions under the CARES Act. Under existing law, for employers with daily payroll tax liabilities of less than $100,000, payroll tax deposits are made either monthly or semiweekly (depending upon the annual amount of employment taxes). For most employers, payroll tax liabilities for the first quarter of 2020 (1/1 – 3/31/2020) will already have been paid, or the amounts yet unpaid may not be materially affected due to the effective dates provisions of applicable sections of the CARES Act.
Employers may be entitled to a tax credit against payroll taxes for employee retention wage payments made after March 12, 2020 (read “Employee Retention Tax Credit Available in the CARES Act“). Employers may be able to reduce their payroll tax deposits going forward by the amount of the expected credit.
Under separate provisions of the CARES Act, all employers may defer depositing that portion of payroll taxes attributable to the employer’s social security tax obligation. This relief is available for deposits due during the period 3/27/2020 through 12/31/2020. The deferred amounts are payable over the next two years – half due December 31, 2021, and half due December 31, 2022. Employers can defer their portion of social security tax and still apply for and receive a PPP loan. However, once an employer receives PPP loan forgiveness, the employer cannot from that date forward continue to defer payroll taxes. The amount of payroll taxes already deferred will nevertheless continue to be deferred and be due on December 31, 2021, and December 31, 2022.
Please contact Kevin Halloran or your Bose McKinney & Evans attorney for more information.