IF YOU BUILD IT THEY WILL COME:
Tax Benefits for Employers Hiring New Employees
*By Jessica Tucci

President Obama signed H.R. 2847- the Hiring Incentive to Restore Employment (HIRE) Act- into law on March 18, 2010. HIRE amends the Internal Revenue Code by providing two new tax benefits to employers hiring unemployed workers. The first tax benefit essentially exempts employers from paying their share of Social Security taxes (or 6.2%) on wages paid to newly hired employees after March 18, 2010. Employers still must pay their share of Social Security taxes from new hires and then claim the payroll tax benefit on their 2010 federal employment tax returns. The second tax benefit affords employers a general business tax credit of up to $1,000 per new employee if the employer retains the new employee for at least one year.

Tax benefits are not automatic. The employer must be a business, agricultural employer, tax-exempt organization or public college or university. Household employers do not qualify for the tax benefits. Employers must hire new employees between February 3, 2010 and January 1, 2011, and the new employee must fill a newly added position or a position that was previously occupied by an employee that voluntarily left or was terminated for cause. Finally, employers must obtain a form from the new employee attesting that he or she was unemployed for the 60 days prior to starting work or worked less than 40 hours total for a different employer during the 60 days prior to starting work. The Internal Revenue Service will post the new tax provisions and the required form in the coming weeks at www.irs.gov.

*Jessica Tucci has extensive experience in all aspects of workplace law. For more information about this legislation or other employment matters, please contact Jessica at 216.696.4441 or jtt@zrlaw.com.

This newsletter is not intended as a substitute for professional legal advice and its receipt does not constitute an attorney-client relationship. If you have any questions concerning any of these articles or any other employment law issues, please contact Stephen S. Zashin at 216.696.4441.
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