New Jobs Bill Affects Businesses
On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act. The HIRE Act provides various incentives to employers for hiring unemployed workers. Businesses will see immediate benefits for hiring individuals who have been unemployed for at least sixty days. HIRE provides payroll tax forgiveness paid by employers in 2010 for qualified employees. HIRE also provides yearly tax credits for retaining those employees for 52 consecutive weeks. The amount of the credit will be the lesser of $1,000 or 6.2% of wages paid by the employer to the qualified retained worker during the 52 week period.
A qualified employee must start working after February 3, 2010 and before January 1, 2011 for an employer to receive the incentives. The employee cannot have been employed for more than 40 hours during the 60 days prior to the employee’s start date. Additionally, the qualified employee cannot take the place of a current employee unless the current employee left voluntarily or was dismissed for cause. Neither individuals who are related to the employer nor individuals who own more than 50 percent of the business are qualified employees. There is no minimum or maximum number of hours for which an employee must be hired in order to qualify. Employees who were previously laid off by the employer will qualify, as long as the employee meets the other eligibility requirements. The United States and state or political subdivisions, with the exclusion of state colleges and universities, are not qualified employers under the HIRE Act.
In order for the IRS and payroll departments to prepare for the implementation of HIRE, the Act will not apply to the first quarter of the calendar year 2010. However, credits that would have applied to the first quarter will be credited for the second quarter of 2010.
For more information on how the HIRE Act affects your business, please contact our office at 501 374 2910.
