Today, as anticipated, the U.S. Senate approved the amended HIRE Act, which had been passed back from the House on March 4th (see previous post).   As you may recall, this bill includes a Payroll Tax Forgiveness program. For qualifying workers, this will relieve employers of the 6.2 percent FICA tax expense during 2010. If such a worker remains employed for at least 52 weeks, the employer receives a $1,000 income tax credit for 2011.
President Obama has committed to signing the bill.  Today, the WOTC Coalition promised to issue an advisory to Coalition members, with information about implementing this new law.
To qualify, an employer must determine that a new hire was unemployed for at least 60 days prior to hire (with no more than 40 h0urs of work during that period).  A signed statement is required.  My firm has been moving in this direction for our clients since we first learned of the HIRE Act’s tax incentive provisions last month.
There will be some challenges for employers who wish to take full advantage of the Payroll Tax Forgiveness Program.  The program applies to qualifying employees hired after the date of February 3, 2010.  Since the tax relief only applies to wages paid through the end of the calendar year 2010, it will be important to identify eligible employees from as early as possible in the year.
And yet, as of today, March 17th, the bill has not yet actually become law. (And it won’t until President Obama actually signs it.)  As a result, employers will need to retroactively evaluate new employees hired since February 3rd to determine their eligibility.
If you have questions, please call me at (800) 655-5281, ext 101, or send me an email at vah@hromiko.com.  I’d love to chat with you and answer your questions.