You may have filed an application for a Paycheck Protection Program (PPP) loan, but there is another option in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that you can start taking advantage of right now. It is the deferral of the employer’s portion of the Social Security tax on your payroll. You may begin deferring the employer’s portion of the Social Security tax starting now through December 31, 2020. You will have 2 years to pay the taxes back, 50% due by December 31, 2021 and the balance is due by December 31, 2022. This is intended to help with your cash flow immediately.
You may defer applicable taxes at the same time you are applying for the PPP Loan and even after you receive the loan, however, you may not defer the deposit remittance once you receive a decision from the lender that the PPP Loan is forgiven under the Cares Act. The Social Security tax already deferred will be due per the time schedule stated above.
If you elect to participate in this program, you must communicate with your payroll provider to stop the collection and remittance of the eligible payroll tax. Your payroll provider will have the ability to monitor the balance of payroll taxes due for each payroll. As the deferred taxes become due, you will ultimately be responsible for making the deferral payments to the taxing agency, however, your payroll provider may also have the ability to collect the deferred taxes from you and remit payment on your behalf.
The next step is to contact your payroll provider to initiate the CARES Act Payroll Tax deferral program or communicate your desire to participate in one of the other CARES Act or Federal Families First Coronavirus Act (FFCRA) tax credit or tax deferral programs. Your payroll provider may have their own election form to complete, otherwise, this CDH Election Form will help you determine which program may be right for you.
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Senior Payroll Specialist
Payroll Operations Coordinator