By Margaret M Stewart / Shutterstock.com

Agencies Outline How Feds Will Repay Payroll Taxes That Have Been Deferred

A weekly roundup of pay and benefits news.

Federal payroll processors have begun announcing plans for how they will recoup federal employees’ Social Security taxes deferred as part of a controversial Trump administration program between last September and December.

Last year, President Trump issued a memorandum allowing employers to defer payment of payroll taxes between September and December 2020. Although the vast majority of private sector employers—and federal employers outside of the executive branch—declined to do so, the administration forced all executive branch employees and members of the military to defer their payroll taxes.

Democratic lawmakers were unable to pass legislation to make the deferral optional for feds, but the omnibus spending package signed by President Trump last month includes a provision extending the deadline for employees to pay back the unpaid taxes from April to the end of 2021. In recent days, several federal payroll processors have explained how they will implement the provision. The news was first reported by Federal News Network.

The Defense Finance and Accounting Service, which handles payroll for the Defense Department and the military service branches, said that for civilians and active duty military service members, the deferred taxes will be taken out in equal installments over the course of all 24 semimonthly pay periods in 2021. The system is more complicated for reservists and members of the National Guard.

“For reservists and guardsmen performing intermittent duty in 2021, the amount collected may not be the same every pay period,” the agency wrote. “DFAS will collect 2% of net available from each weekly, mid-month and end-of-month pay, and will continue until the deferred taxes have been repaid in full.”

Civilian Pentagon employees who retire or otherwise leave the Defense Department this year will either see the entire remaining balance taken out of their last pay check, or those employees may “receive a debt letter with instructions for payment.”

The Agriculture Department’s National Finance Center, which provides payroll services for more than 600,000 employees across the federal government, recently updated its FAQ on the payroll tax deferral to spell out how the deferred taxes will be recouped over the course of 2021. Employees whose agencies use the National Finance Center will see the deferred taxes taken out in 26 “even installments” running between the last paycheck from 2020 through the 25th biweekly pay period this year.

The agency said that employees will not have an option to have their taxes collected in any other way, unless they leave federal service before the end of 2021.

“There is not a way for employees to elect one lump sum payment,” the agency wrote. “The primary repayment method will be through payroll deduction starting in [pay period] 26, 2020, through [pay period] 25, 2021, for those employees still on the rolls.”

Agencies that use the National Finance Center will pay the deferred payroll taxes of feds who retired during the deferral period last year, but those retirees will be expected to pay their former employer back.

“Your agency will pay the deferred Social Security taxes to the [Internal Revenue Service] on your behalf, and you will owe your agency for this repayment,” the FAQ states. “Collection will occur through the NFC debt management process. A debt letter will be sent to your address of record via U.S. Mail. The debt letter will provide instructions for repayment.”

Similarly, employees who retire this year will also receive a debt letter with instructions on how to repay their agency for any remaining deferred taxes that must be recouped.

The Interior Department’s Interior Business Center, which provides payroll services to more than 150 “federal organizations,” did not respond to a request for comment Wednesday on how it is handling repayments.

NEXT STORY: The Numbers That Matter in 2021

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.