UPDATE: IRS Issues Guidance on the HIRE Act

   The Internal Revenue Service has provided additional guidance on the recently enacted Hiring Incentive to Restore Employment (HIRE) Act.  The HIRE Act generally exempts qualified employers from paying Social Security tax on wages of certain previously unemployed or underemployed new hires for the remainder of this calendar year, and also provides employers up to a $1,000 tax credit for each eligible new hire that remains employed for 52 consecutive weeks.  Read Ice Miller's previous alert about the HIRE Act.

   To qualify for the HIRE Act tax benefits, employers must obtain an executed Form W-11 from each eligible new hire.  Copies of Form W-11 can be obtained on the IRS Web site.  While these completed forms do not need to be filed with the IRS, an employer should retain the forms in the event that the IRS requests they be produced.

   Among the areas of uncertainty addressed in the recent guidance is whether individuals qualify under the HIRE Act who were rehired after previously being laid off by the same employer.  The IRS has affirmatively stated that if an employer hires the same employee back after the 60-day unemployment period has passed, then the individual is a "qualified employee" if all other requirements are satisfied.  Similarly, if due to an increase in business an employer hires a new individual to replace an employee who was previously laid off due to the lack of work, the newly hired individual will qualify under the HIRE Act.  Finally, the IRS also provided that recent graduates who have been in school for some or all of the 60 days preceding the start of his or her employment also qualify.

   For assistance in navigating these and the other requirements of the HIRE Act, please contact Michael Buker, Matthew Ehinger or your Ice Miller labor and employment attorney.