Late on December 23, Congress passed the "Temporary Payroll Tax Cut Continuation Act of 2011" (TTCA) and President Obama signed the new law shortly thereafter.
Under the TTCA, the reduced employee Old Age, Survivor and Disability Income (OASDI) tax rate of 4.2 percent and the equivalent self-employed persons tax rate is extended to apply to covered wages in the first two months of 2012.
TTCA also provides for a recapture of any benefit a taxpayer receives if the remuneration during the first two months of 2012 exceeds $18,350 (two-twelfths of the 2012 wage base of $110,100). The recapture provision would apply only if the temporary payroll tax cut ends on February 29, 2012.
A House-Senate Conference is scheduled to convene soon to consider extending the temporary payroll tax cut for the remainder of 2012.
If you have questions about how this new legislation effects your business or personal tax situation, please contact your Meaden & Moore representative or Pete DeMarco at (216) 241-3272 or firstname.lastname@example.org.