Message to our clients: HIRE Act

In its latest effort to stimulate the economy and encourage employment, Congress passed the Hiring Incentives to Restore Employment Act (HIRE Act), which was signed into law on March 18, 2010. The HIRE Act provides a limited payroll tax "holiday" for employers hiring new workers and business tax credits for retaining such workers.

Employers who hire a new employee between February 3, 2010 and Jan 1, 2011 are exempt from paying their share of the payroll tax (the 6.2% FICA/Social Security withholding) effective with the employees first paycheck after March 18, 2010.

It is important to note that to be eligible, the newly hired employee must have been out of work for 60 days prior to being hired with an allowance for a total of 40 hours work over that period. Further, the newly hired employee must not have been hired to replace another employee, unless such employee voluntarily quit or was terminated for cause.  The newly hired employee must also not be a family member as defined in the Internal Revenue Code.
 
The newly hired employee must provide the employer with a signed affidavit attesting, under penalty of perjury, that the individual was employed a total of 40 hours or less during the previous 60-day period ending when employment starts. We have received a draft of an affidavit that was developed by the IRS and expect a final version this month. When the form is released it will be posted on our website so that you can have it completed by your eligible newly hired employees and then forward it to Alcott for processing.

Additionally, the Hire Act contains a onetime tax credit up to a maximum of $1000 for retaining those newly hired employees for over a year, provided their second 6 month period wages are at least 80% of the first 6 months.

In a major victory for the industry, our Association's federal legislative team successfully secured a legislative clarification on the eligibility of PEO clients to claim the retention tax credit as comments developed by NAPEO were offered into the record by Senate Finance Committee Chairman Baucus (D-MT), Senator Nelson (D-FL), and Senate Finance Committee Ranking Member Charles Grassley (R-IA) clarify that clients of PEOs are the eligible party to claim the credit.

This is a program you should really take advantage of and Alcott will help you through the process. If you have eligible employees or questions do not hesitate to contact our Human Resources Department.

Sincerely,

Lou Basso    Barry Shorten