• On Saturday, August 8, 2020, the President of the United States of America issued an Executive Order which directs the Department of the Treasury to defer the withholding, deposit, and payment of the tax imposed by 26 U.S.C. §3101(a), and much of the tax imposed by 26 U.S.C. §3201 as is attributable to the rate in effect under 26 SC 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020 through December 31, 2020.
• IRS Notice 2020-65 was released on August 25, 2020, providing guidance associated with the payroll tax deferral. To view the notice click here: https://www.irs.gov/pub/irs-drop/n-20-65.pdf.

The IRS emphasized the employee social security tax deferral postponement is optional and while nothing bars an employer from considering employee input, the employer remains the "Affected Taxpayer" and is not required to use the relief even upon an employee's request.

As an employer there may be accounting and legal considerations to take into consideration. We highly recommend talking with your CPA or financial advisor before deciding to defer payroll taxes, as the regulations are evolving. We recommend you should also:

How to setup employee tax deferral

If your company decides to allow your employees to defer their Social Security tax in 2020 do the following:

Note: If a deduction code is setup in Payroll Options and an employee opts into the Social Security Tax Deferral (checkbox in Employee Maintenance) this Deduction Code and offsetting Earnings Code will be used in tax calculation. After Payroll Tax Calculation is run and all tax information is returned from the Sage Payroll Agent, it will automatically add an earnings line and an offsetting deduction line for the employee deferred Social Security tax amount, meaning these codes should not be manually entered by the user in payroll data entry. The Earnings Code and Deduction Code you setup for this deferral should not be used for anything else. The amount of this earnings will be included in the gross earnings for the check but will not be included in the gross wages.

Note if you paid back deferred taxes in 2020:

• If you collect the deferred tax money from an employee or if the employee leaves the company, prior to January 1, 2021, you will need to manually adjust the deferred tax amount you collected from the employee in 2020 tax year in the Deferred Quarter 3 or Deferred Quarter 4 fields in Employee Maintenance, Tax Summary, Benefits window.
  • In this scenario, you may need to uncheck the Opt In To SS Deferral checkbox on the Taxes tab in Employee Maintenance in order for the employee's social security tax to be calculated as usual. Then in Sage 100 Payroll Data Entry, you may need to select manual taxes to manually adjust the employee's social security tax withheld amount for their check (you would make the tax adjustment after Tax Calculation is run).
• For information on the tax reporting requirements see section "Adjusting your tax liability for the deferred amount of employee social security tax that you pay or deposit in the same quarter" in the instructions for Form 941 and the Schedule B form (links are below).

Paying back the Social Security taxes in 2021 that were deferred in 2020

​​​If you deferred the employee portion of Social Security tax in 2020 and need to withhold the deferred taxes in 2021, do the following:

1. Install Sage 100 Payroll 2.21.0
2. Create a deduction code that will only be used track the payback amount of deferred Social Security tax. This deduction code will be used in data entry to withhold the amount of tax and then updated to the Paid Back field in Employee Maintenance > Tax Summary > Benefits window during check register update.
   1. Setup a new Deduction Code:
      1. Open Payroll, Setup, Deduction Code Maintenance
      2. Enter a new Deduction Code and description, for example; PAYBCK – Social Security tax payback
      3. Type = Standard Deduction
      4. Calculation Method = Fixed
      5. Select applicable G/L accrual account
      6. Click Accept
3. In order for the Paid Back field to be updated on the Employee Tax Summary > Benefits window, do the following:
   1. Open Payroll Options
   2. Click on the Entry tab
   3. In the Payback Deduction Code field, select the deduction code previously setup
   4. Click Accept
4. If you would like Sage 100 to calculate the automatic deduction amount and goal based on the employee’s deferred tax amount, do the following:
   1. Go back into Deduction Code Maintenance and select the deduction previously setup
   2. Click Apply button
   3. Leave selections as defaults
   4. Click Proceed
   5. You will be prompted with the following; “Do you want to calculate the employee Social Security tax to be paid back based on the amount that has been deferred?”
      1. Click Yes to apply the deduction code and calculate the Social Security tax payback amount and goal.
         • See Automatic Deduction Calculation in the Additional Information section below for details on how the deduction amount and goal will be calculated when selecting Yes.
      2. Click No to apply the deduction code without automatically calculating the Social Security tax payback amount and goal.

Note: It will be up to the user to review the automatic deductions to ensure the each employee was caclulated as expected to complete the payback by December 31, 2021, see IRS Notice 2021-11

TIP: You can create an export job in Visual Integrator to export employee deductions from PR_EmployeeDeduction table. Select all fields in PR_EmployeeDeduction and the First & Last Name and Pay Cycle fields from PR_Employee. You can use this data to easily confirm the auto deductions were calculated as expected.

Employee Social Security Tax Deferral and Payback Reports

Included in Sage 100 Payroll 2.21.0, are custom reports that can be imported using Report Manager, which can assist you in determining the total amount of employee social security tax that was deferred in 2020 and paid back in 2021.

Do the following to import these reports into Sage 100:

1. Install Sage 100 Payroll 2.21.0
2. Open Library Master, Setup, Report Manager
3. Click Add Report to Menu button
4. In the Menu Wizard, do the following:
   1. On the Define Report Information window, do the following:
      1. Module=Payroll
      2. Path and File Name=browse to ..\MAS90\Utility\PR_SSPayBackCUSTOM.rpt
      3. Report Name=type a report name (for example, Social Security Payback Report) Note: This report includes all employee’s who have an amount in any of the 3 Employee Social Security Tax fields.
      4. Click Next
   2. On the PII Work Tables window, verify the following:
      1. PR_EmployeePIIWrk is in the Selected PII Worktables section
      2. Click Next
   3. On the Select Roles window, do the following
      1. Select the applicable roles and click the Right Arrow then click Next
5. Click Finish
6. Repeat steps above for the PR_SSPayBackBalancesCUSTOM.rpt file (save as a different report name. For example, Social Security Payback Balance Report) Note: This report only includes employee’s who have a balance remaining.
7. After the reports have been imported, they can be accessed from the Payroll > Custom Reports menu

Note: For instructions on importing and using these reports, see PR_SSPayBack Instructions.pdf located in the ..\MAS90\Utility folder.

Federal Tax Reporting

• Form 941 Tax Reporting for Quarter 3 and Quarter 4 in 2020:
  • The programming changes needed to report the deferred employee social security tax on the 941 form for the 3rd and 4th quarters are included in Sage 100 Payroll 2.20.3.
  • Aatrix released the 941 form update on October 1st, please install the Automatic Update when prompted (see KB article ID 18851 DocLink: How to install, activate, update, and uninstall Federal and State Tax Reporting). After installing this update the total deferred employee Social Security tax amount shown in the Deferred Quarter 3 or Deferred Quarter 4 field in Employee Maintenance, Tax Summary, Benefits window, will be reported on the 941 form on Line 13b (Deferred amount of social security tax) and Line 24 (Deferred amount of the employee share of social security tax included on line 13b). TIP: The total in the Soc Sec Deferred in Qtr3 or the Soc Sec Deferred in Qtr4 columns on the "Payback" report can be used to help you reconcile the amounts reported on 941 Form in lines referenced above.
  • • On October 1, 2020, the IRS released revised versions of the 941 form as well as instructions for the 941 and Schedule B forms, below are the links to view the forms and instructions that are applicable for tax filings starting with 3rd Quarter of 2020. Note the links will open the latest tax forms, if you need to access previous IRS tax forms, go to https://www.irs.gov/forms-pubs/prior-year
      • Form 941 (Rev. March 2021): https://www.irs.gov/pub/irs-pdf/f941.pdf
      • Instructions for Form 941 (Rev. March 2021): https://www.irs.gov/pub/irs-pdf/i941.pdf
      • Schedule B (Rev. January, 2017): https://www.irs.gov/pub/irs-pdf/f941sb.pdf
      • Instructions for Schedule B (Rev. March 2021): https://www.irs.gov/pub/irs-pdf/i941sb.pdf
    • Additional information can be found on IRS website, https://www.irs.gov/newsroom/deferral-of-employment-tax-deposits-and-payments-through-december-31-2020

• 2020 W-2 Form Reporting

• If you deferred the employee portion of Social Security tax under Notice 2020-65, when reporting total Social Security wages paid to an employee on the 2020 Form W-2, Wage and Tax Statement, include any wages for which you deferred withholding and payment of employee Social Security tax in box 3 (Social security wages) and/or box 7 (Social security tips). However, do not include in box 4 (Social security tax withheld) any amount of deferred employee Social Security tax that has not been withheld.
• Employee Social Security tax deferred in 2020 that is withheld in 2021 and not reported on the 2020 Form W-2 should be reported in box 4 (Social security tax withheld) on Form W-2c, Corrected Wage and Tax Statement, for tax year 2020. See IRS notice, Form W-2 Reporting of Employee Social Security tax deferred in 2020 under Notice 2020-65.
• The data reported in the Paid Back column of the "Payback" report can be used to assist you with determining the amounts to use when preparing your W-2c/W-3c forms. For more information on printing W-2c/W-3c forms in Sage 100 see knowledgebase article, DocLink: How to reprint W2, W3, W2c, W3c Forms

Automatic Deduction Calculation

When selecting Yes at the prompt to calculate the payback deduction amount and goal the following will occur:

1. For all active employees, it will add the value in the Employee Maintenance, Benefits, fields for Deferred Quarter 3 + Deferred Quarter 4 for year 2020.
2. If the value in step A minus the Employee Maintenance, Benefits, fields for Paid Back in 2020 and 2021 is greater than zero, then an automatic deduction will be created for the employee.
3. The Deduction Goal will be calculated as follows:
   • Employee Maintenance, Benefits, fields for Deferred Quarter 3 + Deferred Quarter 4 for 2020 - Employee Maintenance, Benefits, fields for Paid Back in 2020 and 2021
4. The Deduction Amount will be calculated as follows:
   • The Goal in step C divided by the number of pay cycles from January 1, 2021 through April 30, 2021. The pay cycle is determined by the pay cycle selected in Employee Maintenance on the Pay Defaults tab.
   • The number of pay cycles will be as follows:
     • Daily = 86
     • Weekly = 17
     • Biweekly = 9
     • Semi-Monthly = 8
     • Monthly = 4
     • Quarterly = 2
     • Annually = 1

Examples

• Employee John is a weekly employee. He had $496 SS tax deferred in quarter 3 of 2020 and $620 SS tax deferred in quarter 4 of 2020. There was no payback. When the deduction is applied, an automatic deduction will be created for the employee.
  1. Deduction Code Goal = $1,116 ($496 + $620)
  2. Deduction Amount = $65.65 ($496 + $620) / 17
• Employee Jordan is a biweekly employee. She had $1000 SS tax deferred in quarter 3 of 2020. Then opted out of the tax deferral in the 4th quarter. There was no payback. When the deduction is applied, an automatic deduction will be created for the employee.
  1. Deduction Code Goal = $1,000
  2. Deduction Amount = $111.12 ($1,000 / 9)

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How to print the 941 and Schedule B forms in Sage 100