Revenue confirmed last year that they will facilitate employers who want to pay the 2020 income tax and USC liabilities of employees which arose due to the TWSS, without the application of Benefit-in-Kind (BIK).
The employer must engage directly with their employees on the matter and agree the mechanism to pay the liability involved. Employees’ Preliminary End of Year Statement, should assist in determining the amount of underpaid income tax and USC due to TWSS.
To pay the liability, the employer can:
• Provide funds to each employee to meet their IT and USC liabilities, as shown in their Preliminary End of Year Statement. Each employee must then pay their liability via RevPay. Or…
• Amend their last payroll submission of 2020 to add additional ‘IT paid’ and ‘USC paid’ that equals the liability shown on the Preliminary End of Year Statement. This must be done for each employee concerned. Revenue advise that some payroll packages do not provide this facility and it may be necessary to enter the information manually on ROS. A revised monthly statement will issue for the additional amount to be paid. The employee’s Preliminary End of Year Statement will be recalculated subsequently. This will show the additional IT and USC liabilities paid by the employer.
For both options above, each employee must complete their 2020 Income Tax Return.
This facility, enabling an employer to make payments of behalf of employees, will only apply up to the end of June 2021. Revenue also notes the importance of employers retaining documentation of their arrangements and agreement with employees.
Employers paying amounts to settle these employee liabilities will not receive a deduction for these payments under Section 81(2)(a) TCA 1997. These payments would not be regarded as wholly and exclusively incurred for the purposes of the employer’s trade or profession. Furthermore, Section 81(2)(p) specifically denies a deduction in respect of any taxes on income.
If you have any queries on any of the above, please don’t hesitate to contact Pat Sutton from O’KellySutton on firstname.lastname@example.org or Patrick ORourke on email@example.com