IRS Issues More HIRE Act FAQ's

  

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The IRS has updated its website to include more frequently asked questions on the provisions in the “Hiring Incentives to Restore Employment Act” (HIRE Act) that allow qualified employers to claim a payroll tax exemption and/or new hire retention credit.

The HIRE Act encourages companies to hire unemployed workers in 2010 by exempting the employer’s share of Social Security taxes (payroll tax exemption) for qualified individuals, and by providing employers with a business tax credit if new hires are retained for at least 52 consecutive weeks (new hire retention credit). For an employer to receive these tax benefits, the unemployed worker must be a “qualified employee.” A qualified employee” is anyone who:

1. begins work for a qualified employer after Feb. 3, 2010 and before Jan. 1, 2011;
2. certifies by signed affidavit (under penalties of perjury) that he or she was employed for a total of 40 hours or less during the 60-day period ending on the date the employment begins;
3. is not employed to replace another employee of the employer unless that former employee separated from employment voluntarily, or for cause; and
4. is not related to the employer.

See more details about the HIRE Act in a previous article.

The IRS now has three categories of FAQ’s for the payroll tax exemption:

1) FAQ’s about the payroll tax exemption and qualified employers
2) FAQ’s about qualified employees
3) FAQ’s about claiming the payroll exemption

The IRS also has three categories of FAQ’s for the new hire retention tax credit:

1) FAQ’s about the tax credit
2) FAQ’s about retained workers
3) FAQ’s about calculating and claiming the tax credit

These questions and answers should clarify confusion employers may have had regarding who is eligible and how to claim the payroll tax exemption and the tax credit.