The Hiring Incentives to Restore Employment (HIRE) Act was signed into law by President Obama on March 18, 2010. This act has two main provisions that impact employers.
Social Security Tax Exemption
The social security tax exemption applies to employees hired after February 3, 2010, who were previously unemployed for at least 60 days prior to being hired, or who worked less than a total of 40 hours in the 60 day period prior to beginning work for the new employer. Employers will save the 6.2% employer social security tax, up to the wage base limit, on wages paid to these employees after March 18, 2010, and before January 1, 2011. Household employees and family members are not considered eligible employees. Eligible employers are businesses, agricultural employers, tax-exempt organizations, public colleges & universities.
Eligible employees will be required to certify by "signed affidavit" under penalties of perjury that they have not been employed for more than 40 hours during the 60 day period prior to their hire date. Employers are required to retain these statements for a currently undefined period of time.
Eligible positions are newly created positions or positions being filled because the worker left voluntarily or for cause (termination for a reason - inclusive of workforce reduction, "for cause" does not include termination to hire a family member).
The first quarter tax credit will be reported on the second quarter Form 941, which is currently being redesigned by the IRS.
Employers that retain these eligible employees for 52 consecutive weeks after they are hired may be eligible to claim an additional tax credit up to $1,000 for each retained employee on their income tax return.
The IRS will be posting forms, FAQs, and more information on their website regarding the new tax provisions during the next few weeks. The IRS notification can be accessed by clicking the following link: 2010 HIRE Act Information.
Based on this new announcement, Sage Accpac has released the March 31, 2010 payroll tax updates for that current Payroll Update Plan (PUP) subscribers. New tax tables (Version 5.6E/5.5I/5.4N) are available for download as of March 23, 2010.