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Matt Black, Tax Director
The McClatchy Company

Hiring Incentives to Restore Employment (HIRE) Act

Overview

Under the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, two new tax benefits are available to employers who hire certain previously unemployed workers (“qualified employees”).

The first, referred to as the payroll tax exemption, provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.

In addition, for each qualified employee retained for at least 52 consecutive weeks, businesses will also be eligible for a general business tax credit, referred to as the new hire retention credit, of 6.2 percent of wages paid to the qualified employee over the 52 week period, up to a maximum credit of $1,000.

On Thursday, March 18th, President Obama signed into law a new “jobs stimulus bill” called the Hiring Incentives to Restore Employment Act (HIRE). This new Act is designed to provide incentives for employers who hire unemployed workers during 2010.

The Act has two important provisions that may affect your business:

1) It eliminates the current 6.2% employer Social Security tax during 2010 for eligible new hires, and

2) It offers businesses a $1,000 tax credit in 2011 for keeping eligible employees for at least 52 consecutive weeks that were hired in 2010.

Eligible employees must meet several conditions in order for employers to claim these special tax incentives. The 6.2% employer Social Security tax (OASDI) forgiveness became effective immediately and began to accrue as of March 18th for eligible employees hired on or after February 4th.

Services

Due to Romo Incentives Group’s Enterprise Zone and WOTC tax credit services, our firm already has processes and forms in place to review and monitor employees’ eligibility for this new Act. Listed below are several services provided by Romo & Associates, Inc. for companies who do not want to be burdened with the administrative and compliance requirements of the HIRE Act legislation.

Romo Incentives Group’s services include:

  • Screening for Future and Prior Hires: – We will provide questionnaires and affidavits to be completed by all new hires and returned to us in a postage paid pre-address envelope. We will also retroactively identify and secure signed affidavits for eligible employees hired since February 4, 2010.
  • Reporting – Provide timely reporting of qualified hires so you can realize savings immediately and not wait until the end of each quarter.
  • Compliance – Romo Incentives Group will run regular compliance reports to help ensure eligible new hires have completed the unemployment status questionnaire and affidavit.
  • Documentation and Audit Support – Romo Incentives Group will maintain valid documentation on file, provide clients with an electronic spreadsheet of qualified employees, and assist in responding to related audits for the payroll tax credit.
  • Income Tax Credit Administration – Romo Incentives Group will track and document qualified employees who complete 52 weeks of employment and then notify our clients of their eligibility for $1,000 income tax credit per qualified employee.
  • WOTC versus HIRE Act – For employees that qualify for both WOTC and the HIRE tax credit, the HIRE Act requires employers to elect which tax credit they will use and prohibits employers from using both credits for the same employee. Romo Incentives Group will help employers determine which tax credit is more advantageous for each employee depending upon the employee’s wage and number of hours worked.