By: JoAnn Gossett, August 2010

The Hiring Incentives to Restore Employment (HIRE) Act was signed into law on March 18, 2010.  The HIRE Act created two new tax benefits designed to encourage employers to hire and retain new workers.  Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2 percent payroll tax exemption on wages paid to these workers after March 18, 2010.  This exemption is claimed on the employer’s quarterly or annual employment tax return.

Eligible workers are those who have worked no more than 40 hours for anyone during the 60 days before being hired.  They cannot be family members or other relatives of the employer.  The eligible worker must complete Form W-11 (or a substitute) to verify their eligibility.

Businesses, agricultural employers, tax-exempt organizations, tribal governments and public colleges and universities all qualify to claim the payroll tax exemption.  Household employers, federal, state and local government employers other than public colleges and universities are not eligible.  The positions filled must be newly created jobs or positions to replace workers who have left voluntarily or have been fired for cause.

Additionally, a related new hire retention tax credit will be available in 2011 to employers who have retained HIRE eligible workers for 52 weeks – subject to certain regulations.

Please contact your local office of Leffel, Otis & Warwick if you would like more information or assistance in claiming these incentives.