By Jessica Tucci
President Obama signed H.R. 2847- the Hiring Incentive to Restore
Employment (HIRE) Act- into law on March 18, 2010. HIRE amends the
Internal Revenue Code by providing two new tax benefits to employers
hiring unemployed workers. The first tax benefit essentially exempts
employers from paying their share of Social Security taxes (or 6.2%) on
wages paid to newly hired employees after March 18, 2010. Employers
still must pay their share of Social Security taxes from new hires and
then claim the payroll tax benefit on their 2010 federal employment tax
returns. The second tax benefit affords employers a general business
tax credit of up to $1,000 per new employee if the employer retains the
new employee for at least one year.
Tax benefits are not automatic. The employer must be a
business, agricultural employer, tax-exempt organization or public
college or university. Household employers do not qualify for the tax
benefits. Employers must hire new employees between February 3, 2010
and January 1, 2011, and the new employee must fill a newly added
position or a position that was previously occupied by an employee that
voluntarily left or was terminated for cause. Finally, employers must
obtain a form from the new employee attesting that he or she was
unemployed for the 60 days prior to starting work or worked less than 40
hours total for a different employer during the 60 days prior to
starting work. The Internal Revenue Service will post the new tax
provisions and the required form in the coming weeks at www.irs.gov.
