The $17.6 billion HIRE Act was enacted into law on March 18. The law provides $13 billion in payroll tax incentives for businesses and nonprofits to hire new workers, an expansion of incentives for financing construction activity, and an extension of higher expensing limits for capital investments made by small businesses. Nonprofits and foundations are eligible for the payroll tax incentive that relieves employers from paying their 6.2 percent share of Social Security payroll tax for each new hire for the remainder of 2010.
Who Qualifies?
New hires filling existing positions may qualify for the credit if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify. In addition, the new law requires that the employer get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period.
Any employer, including businesses, agricultural employers, tax-exempt organizations and public colleges and universities, may claim the payroll tax benefit for eligible newly-hired employees. This means they will not have to pay its 6.2 percent share of the Social Security payroll tax for individuals hired after February 3, 2010, if the new employee certifies that they did not work more than 40 hours during the 60 previous days. The credit applies to wages paid from March 19, 2010 through December 31, 2010.
IRS Forms and Resources:
For more information, please visit the Internal Revenue Service's website.
