HIRE Act Information

A D Computer’s payroll system allows employees to be defined as qualified individuals under the Hiring Incentives to Restore Employment (HIRE) Act. The employer's payroll tax liability will be reduced by the employer’s 6.2% share of social security tax on the wages and tips paid to qualified employees from March 19, 2010 through December 31, 2010. The employer’s tax forgiveness for all qualified employees will be reflected in the 941 liability and deposit amount and reflected on the revised Form 941 beginning in the second quarter 2010. Businesses, agricultural employers, tax-exempt organizations and public colleges and universities all qualify to claim the payroll tax benefit for eligible newly hired employees. U.S., state or local political subdivisions or any instrumentality thereof are not a qualified employers.

A qualified individual (a) must begin employment after February 3, 2010 and before January 1, 2011, (b) sign an affidavit (IRS Form W-11 or similar statement) that he or she has not worked more than 40 hours during the 60-day period ending on the date the employment begins, (c) cannot replace another employee unless that former employee separated from employment voluntarily or for cause and (d) is not related to the qualified employer or to anyone owning 50% or more of the stock or other capital of the company.

An additional business tax credit may be available for employers who hire new workers who qualify for the payroll tax forgiveness and keep them on the payroll for at least 52 consecutive weeks. The business tax credit would be the lesser of $1,000 or 6.2 percent of wages paid by the taxpayer to the qualified retained worker during the 52 consecutive week period. A qualified retained worker must be paid at least 80 percent of his first 26 weeks of wages during the last 26 weeks of the 52-week qualifying period.

See WWW.IRS.GOV for the affidavit Form W-11, Hire Act Q & As, and information on the new hire retention business tax credit.