Employer Tax Credit: $10B Reasons to Take Advantage of the HIRE Act
Posted by Kirsten Meyer on Mon, Dec 13, 2010 @ 02:28 PM
By Ross Henderson, COO of Employment Tax Specialists, Inc.
On August 2nd, the U.S. Treasury released a new report indicating that 5.6 million newly-hired employees are eligible for the HIRE Act Tax Exemption.1 The Treasury estimates that translates to potential employer tax credits of over $10 Billion. The HIRE Act is a two-part financial incentive for employers. The first component of the program is a “payroll tax holiday” of the employer Social Security tax obligation (FICA) for the eligible new hires, which is estimated to contribute over $6 Billion in potential savings.
The second component of the program is a credit tied to the retention of the eligible new hires that remain employed for 52 weeks. This part of the program is estimated to contribute over $4 Billion in potential savings. What’s more, the new hires do not necessarily need to be paid each of those 52 weeks to qualify for the tax credit; they can be seasonal or sporadic hires, provided they remain on the payroll books for at least 52 weeks.
It’s not too late to get in on the HIRE Act!
1) It is still possible to do a retrospective refund recovery associated with the quarterly FICA tax credit periods that have already passed.
2) The HIRE Act tax exemption is ongoing through the end of 2010 for employers hiring eligible workers with 60 days or more of unemployment.(1)
3) Employers in states with especially high unemployment rates (such as CA, NY, FL, and MI) are particularly well-poised to benefit from the large pool of potentially eligible new hires.
4) There is also talk of extending the HIRE Act beyond its current expiration date at the end of 2010, but as of now, no extensions have been confirmed.
For those employers that haven’t yet established a HIRE Act administration program, now is the time! The HIRE Act is an important opportunity for employers to offset the financial impact of rising SUI tax rates and increasing taxable wage base trends.
For more information about your options, contact Ross Henderson at r.henderson@employmenttax.com.
(1) August 2,2010 TG-804, “Treasury Releases New Analysis of State-By-State Reach of Hire Act Tax Credit: Updated Treasury Estimate Shows 5.6 Million Newly Hired Employees Eligible for HIRE Act Tax Exemption.” Accessed at: https://ustreas.gov/press/releases/tg804.htm