Click here to view in a web browser <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/e1cfdb5c09> .
HIRE Act Creates a Payroll Tax Holiday for Qualified Employers
The Hiring Incentives to Restore Employment (HIRE) Act <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/9f896bf60d> provides a Payroll Tax Holiday for hiring and retaining previously unemployed workers. This provision applies to wages paid beginning after March 18, 2010, and ending on December 31, 2010. Qualified employers are forgiven their 6.2 percent share of the “old age, survivors, and disability insurance (OASDI)” component of Social Security payroll taxes for qualified employees performing services in a trade or business. For purposes of this provision, a qualified employer is any employer other than the United States, any state, any local government, or any instrumentality of the preceding. However, a qualified employer will include any public higher education institution. A qualified individual is any individual who:
• begins work for a qualified employer after February 3, 2010, and before January 1, 2011;
• certifies by a signed affidavit that he or she was employed for a total of 40 hours or less during the 60-day period ending on the date such employment begins;
• is not employed to replace another employee of the employer unless such employee separated from employment voluntarily or for cause; and
• is not a related party.
Employers who qualify for the tax exemption in the first quarter of 2010 will receive the benefit through a credit toward their second quarter 2010 Social Security liability. After the first quarter, however, the employer does not pay the 6.2 percent tax as wages are paid. The Payroll Tax Holiday does not affect any future Social Security benefits of affected employees.
REPORTING NOTES
• The IRS has released a new form, Form W-11 <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/d4d210bc01> , which serves the purpose of certifying that employees have not been employed for more than 40 hours during the prior 60 days.
• Payroll systems will need to be monitored for potential qualified employees.
• The IRS has also released a newly revised Form 941 <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/6a59f96eab> , for employers to use beginning with the second quarter of 2010 to claim the payroll tax exemption for qualified individuals.
PLANNING NOTES
• Employers may not claim a Work Opportunity Tax Credit (WOTC) <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/76aecbe90b/p=83> for the same wages on which they are receiving Payroll Tax Holiday benefits. There are many possible scenarios where claiming the Payroll Tax Holiday is more beneficial than claiming the WOTC, and, as a general rule, claiming the Payroll Tax Holiday will provide quicker cash flow benefits.
• There may be benefits for seasonal, temporary, or part-time employees that are not immediately apparent under this provision.
• The Payroll Tax Holiday is closely associated with a new Employee Retention Credit <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/7a7888908b> .
If you have any questions about the Payroll Tax Holiday, please contact your Cherry, Bekaert & Holland, L.L.P. advisor <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/c44e995e24> .
About Cherry Bekaert & Holland
For over 60 years, Cherry, Bekaert & Holland, L.L.P. (CB&H) has provided high-quality financial and management services to a diverse and successful client base. Currently ranked among the top 30 accounting firms in the nation, CB&H is uniquely positioned to impart quality, cost-effective and practical advice to clients that include multinational corporations, private businesses, nonprofit organizations, governmental entities, emerging or start-up firms, and successful individuals. Visit the Cherry, Bekaert & Holland Web site:
www.cbh.com <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/b28669afed>
Visit the CB&H Economic Recovery Resource Center: economy.cbh.com <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/ac855e1886> <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/21f445d226/home=&gid=2627396&trk=anet_ug_news> <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/766f39b87b> <http://cts.vresp.com/c/?CherryBekaertHolland/540f3b8eba/4e8b55046e/778a1e356c>
________________________________________
U.S. Treasury Department Circular 230 Disclosure: In accordance with applicable professional regulations, please understand that, unless specifically stated otherwise, any written advice contained in, forwarded with, or attached to this communication is not a tax opinion and is not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding any penalties that may be imposed under the Internal Revenue code or applicable state or local law provisions or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.
Cherry, Bekaert & Holland, L.L.P.1700 Bayberry CourtSuite 300Richmond, Virginia 23226US Read <http://www.verticalresponse.com/content/pm_policy.html> the VerticalResponse marketing policy. <http://www.verticalresponse.com/landing/?mm/540f3b8eba>
Sandy Fowler
Executive DirectorHampton County Economic Development Commission
P. O. Box 672
Hampton, SC 29924
(803) 943-7521 - office (803) 943-7538 - fax
sfowler@hamptoncountysc.org www.hamptoncountyedc.com
