While many U.S. employers have taken advantage of the 2010 federal HIRE Act’s Payroll Tax Exemption benefit, many more have not. As it currently stands, the Payroll Tax Exemption program is slated to expire on December 31, 2010; however, at least 2 facts mitigate the looming end of the program. (more…)
U.S. Senator Debbie Stabenow of Michigan has introduced S3706, The Americans Want to Work Act. Of most interest to this forum is that this bill would extend the HIRE Act’s Payroll Tax Exemption through the end of 2011. The Payroll Tax Exemption is currently slated to expire on December 31, 2010. (more…)
On August 2, the U.S. Treasury Department published a report titled Updated Estimates of Newly Hired Employees Eligible for the Hire Act Tax Exemption. If you have a problem with that link, you can still read the Department’s press summary.
This new report provides monthly updated estimates of potential eligibility under the HIRE Act, including data through June 2010. According to the updated estimates, from February 2010 to June 2010, businesses hired 5.6 million new workers who had been unemployed for eight weeks or longer;
US Teasury Department Says Employers Missing Out on 2010 Payroll Tax Exemption – Obama Will Likely Push for Extension
I found this piece by Deborah Solomon, published online today by the Wall Street Journal.
While accurate statistics will not be available until year’s end when companies complete the filing of their tax returns, anecdotal evidence suggest the HIRE Act’ 2010 Payroll Tax Exemption is far from being fully utilized by U.S. employers. In response, President Obama’s Treasure Department is expected to begin marketing the program more aggressively. The Obama Administration will also probably seek to extend the program beyond its current December 31, 2010 expiration date. (more…)
Hot off the IRS Newswire!
Today, the IRS issued a new Form 941, especially revised to accommodate the HIRE Act’s 2010 payroll tax exemption program. For more information about the payroll tax exemption, see my previous posts right here on the WOTCPlanet.com. Click here for a collection of posts on this topic. (more…)
I received a call yesterday from a very nice Human Resources Manager asking about the HIRE Act’s Payroll Tax Exemption’s “family member” restriction. Employers can not claim the payroll tax exemption for wages paid to members of the employer’s family. Sounds simple, but exactly whose family members are restricted? Let’s explore this issue a little.
On the IRS website, in response to the question “Who are eligible employees?” the IRS responds:
Qualified employees are individuals who begin employment with a qualified employer after February 3, 2010, and before January 1, 2011, who have been unemployed or employed for less than 40 hours during the 60-day period ending on the date such employment begins, and who are not family members of or related in certain other ways to the employer.
Additional answers to Frequently Asked Questions (FAQs) about the HIRE Act’s 2010 Payroll Tax Exemption (PTE) have been published on the IRS website. Of particular interest should be the expanded FAQs about how to claim the PTE, including a new code on the form W-2 for employees whose wages are claimed under the program (see FAQ#25).
Oh, what the hey. I’ll just copy a load of them here for your convenience. (more…)
The following is directly from the IRS Newswire dated April 7, which I received about 39 hours ago. I reported on the new Form W-11 a few days ago after it was released in Draft form. The Draft Form W-11 has been officially upgraded to real.
Allow me to suggest that you go back and review my previous post. The Payroll Tax Holiday seems simple on its face; however, there are some operational questions in connection with the Work Opportunity Tax Credit (WOTC) that must be wrestled with (click here).
Please feel welcome to contact me with your questions. Call (800) 655-5281, ext 101 or e-mail me at vah@WOTCPLanet.com.
Directly from the wire….
WASHINGTON — The Internal Revenue Service today released a new form that will help employers claim the special payroll tax exemption that applies to many newly-hired workers during 2010, created by the Hiring Incentives to Restore Employment (HIRE) Act signed by President Obama on March 18.
New Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, is now posted on IRS.gov, along with answers to frequently-asked questions about the payroll tax exemption and the related new hire retention credit. The new law requires that employers get a statement from each eligible new hire, certifying under penalties of perjury, that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for anyone during the 60-day period. Employers can use Form W-11 to meet this requirement.
Most eligible employers then use Form 941, Employer’s Quarterly Federal Tax Return, to claim the payroll tax exemption for eligible new hires. This form, revised for use beginning with the second calendar quarter of 2010, is currently posted as a draft form on IRS.gov and will be released next month as a final along with the form’s instructions.
Though employers need this certification to claim both the payroll tax exemption and the new hire retention credit, they do not file these statements with the IRS. Instead, they must retain them along with other payroll and income tax records.
The HIRE Act created two new tax benefits designed to encourage employers to hire and retain new workers. As a result, 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 incentive, in effect exempting them from the employer’s share of social security tax on wages paid to these workers after March 18. This reduction will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. In addition, for each unemployed worker retained for at least a year, businesses may claim a new hire retention credit of up to $1,000 per worker when they file their 2011 income tax returns.
These two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify for either of these tax incentives.
Businesses, agricultural employers, tax-exempt organizations, tribal governments and public colleges and universities all qualify to claim the payroll tax exemption for eligible newly-hired employees. Household employers and federal, state and local government employers, other than public colleges and universities, are not eligible. IRS.gov has more details.
Related Item: IR-2010-33, Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers (more…)
For those of us awaiting guidance from the IRS about the new Payroll Tax Forgiveness Program of 2010, there is some good news. A draft IRS Form W-11 has been posted on the IRS Website, in addition to a set of Frequently Asked Questions or FAQs. (more…)