Tax Monitor

Important Note for PPP Loan Recipients About Deferring Social Security Taxes

April 23, 2020

By: Valerie F. Gainer

The CARES Act allows all employers to defer certain deposits and payments of Social Security taxes this calendar year. Generally, deposits and payments of the employer’s portion of Social Security taxes may be deferred if such deposits and payments are due from March 27, 2020 through December 31, 2020. Employers must make fifty percent of their deferred deposits and payments by December 31, 2021, and any remaining deferred deposits and payments must be completed by December 31, 2022.  

While employers receiving loans through the Paycheck Protection Program (“PPP”) may utilize this deferral opportunity, they are subject to an important limitation. Once an employer with a PPP loan is notified by its lender that its PPP loan will be forgiven, the employer is no longer eligible to defer Social Security tax deposits or payments. Any deposits or payments due after the lender’s decision must be paid when they would ordinarily be due. Any deposits or payments that were deferred prior to the lender’s decision still follow the extended timeline outlined above for payment (50% due by December 31, 2021 with the remainder due by December 31, 2022).