Hiring Incentives to Restore Employment (HIRE)
by Barry L Weller, EA
Employers who hire unemployed workers after 2/3/2010 and before 1/1/2011 may qualify for an exemption of the employer’s share of the social security tax on wages paid to these new workers after 3/18/2010. This employer exemption will have no effect on the employee’s future Social Security benefits. This exemption does not relieve the employer from withholding and remitting the employee’s share of social security taxes. The employer and employee share of the Medicare tax still applies to all wages. This employer payroll tax exemption does not apply to wages paid to an employee who is hired to replace an existing worker, unless the existing worker terminated employment voluntarily or was terminated for cause.
The HIRE act requires that employers get a signed statement from each eligible new hire employee. In this signed statement, the new hire certifies under penalties of perjury that he or she was not employed for more than 40 hours during the 60 days before beginning employment with this new employer. Family members and other relatives do not qualify for the HIRE exemption. Eligible employees include new employees, previously laid off employees, recent high school or college graduates, and high school or college student summer hires and interns. Employers can use IRS Form W-11 to meet the signed statement affidavit requirement. Employers do not have to send copies of an affidavit or form W-11 to the IRS, but must retain them along with other payroll and tax records.
Employers claim the payroll tax exemption on the quarterly federal payroll tax return Form 941 beginning with the 2nd quarter 2010 return. Eligible employers include businesses, agricultural employers, tax-exempt organizations, colleges and universities. Eligible employers even include a new business just starting payroll as long as the employees are qualified as explained above. Household employers and federal, state or local government employers are not eligible.
Barry L Weller, EA is the president of Barry Weller & Associates with offices at 216 E Philadelphia Ave, Boyertown, PA 19512 Phone (610) 367-8280 He is an enrolled agent, licensed to represent taxpayers before the IRS.
Revised 06/23/2010