The first Jobs Bill signed into law on March 18 by President Obama included the “Hiring Incentives to Restore Employment (HIRE) Act.” This measure is designed to boost hiring by giving employers an exemption from Social Security payroll tax on wages paid to qualified new employees. The exemption will cover wages paid from March 19, 2010 through Dec. 31, 2010.
This Jobs Bill — and in particular the HIRE Act — has not received the headlines it deserves. The significant tax benefits included in the act are expected to benefit nearly every business that increases its hiring during 2010. While qualifying for the tax credit is relatively simple, there are several key steps that a business owner must be aware of in order to take full advantage of this temporary program.
The maximum value of the credit is 6.2 percent of wages up to $106,800. In addition, a business tax credit — also called the ‘retention credit’ — of up to $1,000 may be earned if the qualified employee is retained for 52 consecutive weeks. An affidavit is required to be signed by newly hired employees to certify that they meet the following qualifications:
A hire date commencing after Feb. 3, 2010, and before Jan. 1, 2011;
• They have worked less than 40 hours during the 60 days prior to their hire date;
• They are not related to business owner;
• They are not a principal owner of the business.
Further, qualified businesses will need to verify that the position being filled meets either a newly created position or is an existing position in which the employee being replaced either left voluntarily or was terminated with cause.
Most employers — excluding home-based businesses — are qualified for the program. However, businesses that take the HIRE Act Social Security tax exemption will not be allowed to receive Work Opportunity Tax Credits (WOTC) on wages paid to qualified employees during the one-year period starting from the employee’s hire date. If it is more beneficial to use WOTC tax credits instead of the HIRE Act tax credits, companies may opt-out of the HIRE Act Social Security tax exemption.
Dana Mosloskie is a human resources professional with Oasis Outsourcing, a national consultancy with offices in Hartford.
