What Is The HIRE Act?

The HIRE Act (Hiring Incentives to Restore Employment) has been signed into law effective March 19, 2010. Employers who hire specifically defined unemployed workers will be exempt from paying the employer share of OASDI (Social Security) taxes, a 6.2% tax credit, for these newly hired workers for any payrolls dated from March 19, 2010 to the end of 2010. Furthermore, employers may be eligible for a general business tax credit, up to $1,000 per worker if they are retained for at least a year, when filing their 2011 income tax returns.

What Are The Qualifications That New Hires Must Meet?

·      Previously Unemployed for over 60 days, or working part time.

·      Creating a new position for an unemployed worker  (OR)  Filling an existing position where the previously employed worker left voluntarily or with cause.

·      A statement must be completed by each eligible new hire certifying that he or she was unemployed during the 60 days prior to beginning work or, alternatively, worked less than a total of 40 hours during the 60-day period.

How Does It Work?

1.    Once you have determined that a newly hired employee qualifies you for a tax credit, Payroll Dynamics must be notified PRIOR to the employee’s first payroll processing in order to correctly exempt the employer share of tax. If you are a remote Evolution® user, you may enter the employee and immediately notify Payroll Dynamics. Otherwise, please notify us when reporting your new hire. Please note, even if you are a remote Evolution® user, this tax exemption must be handled by a Payroll Dynamics specialist.

2.    When newly hired employees are paid, OASDI taxes will be withheld from the employees paycheck as usual, however, employers will no longer match the 6.2% tax. Starting January 1, 2011, employer’s will then be required to resume the matching OASDI employer tax.

3.    Employer OASDI tax exemptions for employees hired in the month of March will be treated as a tax credit and will be credited by Payroll Dynamics in May as one lump sum. 

4.    In the next few weeks, the IRS will be publishing a form that employees can use to complete their certification statements. For more information, you can visit the IRS website at www.irs.gov. Payroll Dynamics will continue to monitor this new legislation and keep you informed as needed.

IRS News Release 2010-33 Link