Hiring Incentives to Restore Employment (HIRE) Act

April 7, 2010:  Form W-11 (Employee Affidavit) was released by the Internal Revenue Service today.  The affidavit confirms that the new hire is qualified under the HIRE Act.  Employers can't claim benefits under the act unless the employee completes and signs the affidavit.  (Click the 'Login' link above to print form W-11)

Qualified Employee:  A new hire who begins employment after February 3, 2010 and before January 1, 2011.  The employee must not have been employed for more than 40 hours during the sixty day period ending the day the employee begins employment.   The employee may not be hired to replace another employee unless the other employee separated from employment voluntarily or for cause - including downsizing.  The employee may not be related to the employer or own more than 50% of the employer's stock.  A qualified employee may be either a full time or part time employee.  The form must be retained by the employer in the event of an audit.

Benefits to Employer:  The employer is excused from paying it's share of the 6.2 percent tax on wages received by 'qualified employees'.  The exemption applies to wages paid after the date of enactment (February 3, 2010) through the end of 2010.  The maximum value for each qualified employee is $6,621.00.  For example, if a qualified employee is hired in March 2010 and receives $50,000 in wages by December 31, 2010, the employer saves $3,100.00 (6.2 percent of $50,000) in Social Security tax.  Credits will be detailed on form 941 beginning the second quarter of 2010.  Additionally, the employer can claim a tax credit if it retains a qualified employee for a minimum of 52 consecutive weeks.  The credit is the lesser of $1,000 or 6.2 percent of the employee's wages paid during the 52 week period.

Documentation Required:  The employee must sign a completed affidavit (Form W-11) that must be kept on file.  A copy must be provided to Payrite for the exemption / credit to be calculated properly.  Payrite clients may download the document by clicking the 'Login' link above or it may be downloaded from the IRS.