New Benefits Available to Employers that HIRE
The recently enacted Hiring Incentive to Restore Employment (HIRE) Act provides two potential new benefits to employers that hire certain previously unemployed or under-employed employees between February 3, 2010, and December 31, 2010. In order to claim either benefit, an employer must verify that a newly-hired employee worked no more than 40 hours during the 60 day period immediately preceding the date the employee was hired. The employer does so by having the employee sign an affidavit attesting to the fact that the employee satisfies this requirement during the relevant period. Although states and political subdivisions are generally not entitled to these HIRE Act benefits, an exception exists for public colleges and universities.
The first benefit is a direct reduction in the employer's portion of Social Security taxes for wages paid within the period beginning March 18, 2010, and December 31, 2010; i.e., a savings of 6.2 percent of the employee's wages. The benefit is claimed as a credit on the employer's Form 941, Employer's Quarterly Federal Tax Return, beginning in the second quarter of 2010.
The second benefit is a credit against an employer's income tax liability for the 2011 tax year. An employer is eligible for the credit for qualified employees who are hired between February 3, 2010, and December 31, 2010, and who work for 52 continuous weeks following the hire date. In general, the amount of the credit is equal to 6.2 percent of the employee's wages paid during the 52 week period or $1,000, whichever is less.
The Internal Revenue Service is in the process of revising Form 941 and developing an affidavit form for employees to sign. Until the new affidavit is made available, Ice Miller tax attorneys have prepared an affidavit for employers to use. We suggest employers have each new hire that qualifies for HIRE Act benefits complete and sign the affidavit, which the employer should retain in their files.
In addition to the foregoing, the HIRE Act requires that certain additional requirements must be satisfied in order to take advantage of these benefits. A number of questions remain about the administration of the HIRE Act, as well. For assistance in answering these and other questions, please contact Michael Buker, Matthew Ehinger or your Ice Miller labor and employment attorney. |
