In late January, the IRS updated Notice 2020-65. It provides guidance regarding an executive memorandum signed last summer that allowed employers to defer the withholding, deposit and payment of certain payroll tax obligations in 2020. The update reflects the changed deferral rules contained in the Consolidated Appropriations Act (CAA).

A brief history

On August 8, 2020, a Presidential Memorandum allowed an employer to elect to defer withholding of the 6.2% employee share of the Social Security tax on wages between September 1, 2020, and December 31, 2020.

For affected taxpayers, Notice 2020-65 originally postponed the due date for the withholding and repayment of the applicable taxes until the period beginning on January 1, 2021, and ending on April 30, 2021.

The guidance also provided that the amount of such wages or compensation paid for a bi-weekly pay period must be less than the threshold amount of $4,000, or the equivalent threshold amount with respect to other pay periods.

Dates extended

The CAA requires the IRS to ensure that Notice 2020-65 is now applied by substituting “December 31, 2021,” for “April 30, 2021,” and by substituting “January 1, 2022,” for “May 1, 2021,” in each place it appears. In response, the relief provided by Notice 2020-65 is modified as follows:

For Affected Taxpayers, the due date for the withholding and payment of Applicable Taxes is postponed until the period beginning on January 1, 2021, and ending on December 31, 2021.

Thus, the due date for deferred applicable taxes to be repaid has now been extended from April 30, 2021, to December 31, 2021. Interest, penalties and additions to tax will begin to accrue on January 1, 2022, for any unpaid applicable taxes.

Because December 31, 2021, is a legal holiday, payments made on January 3, 2022 (the next day that’s not a Saturday, Sunday or legal holiday) will be considered timely. Interest and penalties still begin to accrue on January 1, 2022, if payments aren’t made by January 3, 2022.

An affected taxpayer may, if necessary, arrange to otherwise collect the total applicable taxes from an employee. Presumably, this “if necessary” rule covers a situation in which an employee leaves an affected taxpayer’s employment before the full amount of applicable taxes are withheld.

Welcome relief

If your organization opted to avail itself of the payroll tax deferral (it was not required), the newly extended deadline likely comes as welcome relief. Contact us for answers to any questions you may have and for further information on Notice 2020-65 and the CAA.



We highly recommend you confer with your Miller Kaplan advisor to understand your specific situation and how this may impact you.