Can you still defer Social Security tax? What replaced the CARES Act program

If you are looking into deferring your company's share of Social Security tax, the program you have read about is closed. It covered wages paid in 2020, and the last repayment installment came due on December 31, 2022.

There is no current program that lets a company defer payroll tax deposits. Deposits are due on your assigned schedule, and the penalties for missing them start accruing immediately. If the reason you are asking is that payroll is due and the cash is not there, that is a solvable problem, but it is solved through payment arrangements and deposit sequencing rather than deferral, and it carries personal exposure that other tax debts do not.

Here is what the CARES Act program actually was, what happens if you still have an unpaid balance from it, and what the options look like now.

The CARES Act deferral covered 2020 wages and was repaid by the end of 2022

Section 2302 of the CARES Act let employers defer the deposit and payment of the employer share of Social Security tax, 6.2% of covered wages, for wages paid between March 27 and December 31, 2020. Self-employed individuals could defer an equivalent portion of their self-employment tax. Repayment was due in two installments, half by December 31, 2021 and the rest by December 31, 2022.

A second and separate program is often confused with it. A presidential memorandum in August 2020 and the IRS guidance that followed allowed deferral of the employee share of Social Security tax for wages paid between September 1 and December 31, 2020, for employees under a wage threshold. That one was optional for employers, applied to the employee's own money, and was repaid through payroll during 2021.

Both are finished. Neither was extended, and no equivalent has been enacted since.

An unpaid deferral balance is now just unpaid payroll tax

If your company deferred under Section 2302 and never completed the repayment, the deferral protection is gone and the amount sits on your account as an unpaid employment tax liability.

The rule that made this expensive is worth knowing even now. Missing a repayment deadline did not trigger a penalty on the shortfall alone. It triggered the failure to deposit penalty on the entire deferred amount, calculated from the original 2020 due date. A company that repaid most of its balance and missed the remainder by a few weeks ended up penalized on the whole figure.

If this describes your account, the transcript for the relevant quarters will show it, and the balance follows the ordinary collection path from there: notices, then a notice of intent to levy, then enforcement. Whether the penalty can be abated depends on the facts, and it is worth asking rather than assuming.

There is no deferral now, and deposit penalties escalate quickly

Payroll tax deposits are due on a monthly or semiweekly schedule determined by your prior-year liability. The failure to deposit penalty is tiered by how late the deposit is, starting at a few percent for deposits a handful of days late and rising in steps to a higher rate once the delay stretches past two weeks or once the IRS has issued a demand.

The structure matters because the tiers reward partial action. A deposit made four days late costs meaningfully less than the same deposit made three weeks late. If you cannot fund the whole deposit, funding part of it on time is not a wasted gesture.

Interest runs alongside the penalty from the due date, at a rate the IRS resets quarterly.

Unpaid payroll tax is not like other tax debt

This is the part that separates a payroll tax problem from an income tax problem, and it is the reason deferral was ever a live question.

The withheld portion of payroll tax, the income tax and the employee's share of Social Security and Medicare that you took out of their pay, is trust fund money. It belongs to the employee and to the government, and your company is holding it. When it does not get remitted, the IRS can assess the trust fund recovery penalty, which is 100% of the unremitted trust fund amount, against any person responsible for collecting and paying it who willfully failed to do so.

That assessment is personal. It reaches owners, officers, and sometimes bookkeepers or anyone with signature authority and knowledge of the shortfall. Willfulness in this context does not mean intent to evade. Paying other creditors while knowing the payroll deposit was unmade is generally enough. The liability survives the company, so dissolving the entity does not end it, and it is not dischargeable in bankruptcy.

The practical consequence is a sequencing rule. If cash is short, an unpaid vendor is a commercial problem and an unpaid payroll deposit is a personal one.

The options when you cannot make a deposit

File the return regardless. Failure to file and failure to pay are separate penalties, and the filing penalty is the larger of the two. Filing Form 941 on time with an unpaid balance is materially better than not filing.

Designate payments. A voluntary payment can be designated to a specific period and to the trust fund portion of the liability rather than the employer portion. The IRS applies undesignated payments in its own order, which is rarely the order that reduces your personal exposure fastest. This has to be done in writing with the payment.

Ask for an installment agreement. In-business agreements for employment tax exist and the streamlined version covers balances under a threshold over a fixed term. Filing compliance gates it, so unfiled returns have to be resolved first.

Deal with the notices as they arrive. The escalation is driven by notices with response windows that run from the date printed on them. We handle US filings and the IRS correspondence that follows, and our Mailroom product digitizes notices at the registered address, which is the difference between answering in the window and finding out after it closed.

The bottom line

The deferral you are researching ended with the 2020 tax year, and nothing has replaced it. If the underlying issue is cash rather than curiosity, treat an unfunded payroll deposit as the most urgent item in your payables, because it is the one liability that can be assessed against you personally and cannot be discharged. File the returns even when you cannot pay them, designate any partial payment to the trust fund portion in writing, and get into an agreement before the account reaches enforcement. If you still carry an unrepaid CARES Act balance, pull the transcript for those quarters, because the penalty calculation on those accounts was harsher than most people expect.

Frequently asked questions

Can I defer payroll taxes in 2026?

No. The CARES Act deferral applied only to wages paid in 2020 and has not been renewed. Deposits are due on your assigned monthly or semiweekly schedule, with penalties and interest running from the due date if they are late.

What happens if I never repaid my CARES Act deferral?

The balance became a regular unpaid employment tax liability and moved into the normal collection sequence. Missing a repayment deadline also triggered the failure to deposit penalty on the entire deferred amount from its original 2020 due date rather than on the unpaid remainder alone, so the penalty on these accounts is often larger than expected.

Can the IRS come after me personally for my company's unpaid payroll tax?

Yes, through the trust fund recovery penalty. It equals 100% of the withheld employee taxes that were not remitted and can be assessed against any responsible person who willfully failed to pay, which includes owners and officers. It survives the company and is not dischargeable in bankruptcy.

Should I file Form 941 if I cannot pay the balance?

Yes. The failure to file penalty is larger than the failure to pay penalty, so filing on time with an unpaid balance is the cheaper of the two positions. Filing compliance is also a prerequisite for any installment agreement, so an unfiled return blocks the route out.

Can I get a payment plan for payroll taxes?

Yes. In-business installment agreements for employment tax exist, with a streamlined version for balances under a threshold paid over a fixed term, and a financial disclosure required above it. All required returns must be filed before the IRS will consider one.

Does deferring self-employment tax still work?

No. The equivalent provision for self-employed individuals covered the same 2020 period and was repaid on the same two-installment schedule. There is no current deferral for the Social Security portion of self-employment tax.