The Hiring Incentives to Restore Employment Act (HIRE) was just passed to provide employer incentives for hiring and retaining unemployed workers. The Internal Revenue Code was amended to:

(1) exempt for-profit and nonprofit employers, including public institutions of higher education, from social security taxes in 2010 for new employees who are hired after February 3, 2010, and before January 1, 2011, and who certify that they have not worked more than 40 hours during the last 60 days; and

(2) allow an increase in the general business tax credit for the retention of such employees for at least one year at specified wage levels. Prohibits any carryback of unused business tax credit amounts.

Here are the specifics as provided by the Internal Revenue Service (IRS):

Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.

In addition, for each worker retained for at least a year, businesses may claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns.

The two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify.

In addition, the new law requires that the employer get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period. The IRS is currently developing a form employees can use to make the required statement.

Businesses, agricultural employers, tax-exempt organizations and public colleges and universities all qualify to claim the payroll tax benefit for eligible newly-hired employees. Household employers cannot claim this new tax benefit.

Employers claim the payroll tax benefit on the federal employment tax return they file, usually quarterly, with the IRS. Eligible employers will be able to claim the new tax incentive on their revised employment tax form for the second quarter of 2010. Revised forms and further details on these two new tax provisions will be posted on IRS.gov during the next few weeks.

If you would like to review the text of the law, you may do so by clicking here: Hiring Incentives to Restore Employment Act (HIRE)

Managing human resources is a complicated and essential task for small business owners. Sometimes you are not at your computer to find information. We at HRSentry are dedicated to giving users the tools they need to successfully address these issues during their busy day! With the surge in mobile browsing, providing an HR app that gives access to some of these resources fills a void currently not being addressed.

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*Over 270 terms and definitions
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You can purchase “HR At Your Fingertips” today through the Apple App store (iTunes). This is available for the iPhone 3.0 or higher.

You can learn more about this app by visiting www.hratyourfingertips.com

On February 4, 2009, President Obama signed the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA). CHIPRA included a requirement that the Departments of Labor and Health and Human Services develop a model notice for employers to use to inform employees of potential opportunities currently available in the State in which the employee resides for group health plan premium assistance under Medicaid and the Children’s Health Insurance Program (CHIP).

The U.S. Department of Labor has now published the Employer CHIP Notice. For purposes of the Employer CHIP Notice requirement, an employer providing benefits (directly or through insurance, reimbursement, or otherwise) for medical care in a State is considered to maintain a group health plan in that State. If that State provides medical assistance under a State Medicaid plan, or child health assistance
under a State child health plan, in the form of premium assistance for the purchase of group health plan coverage, the employer is required to provide the Employer CHIP Notice.

Specifically, the employer is required to notify each employee of potential opportunities currently available in the State in which the employee resides for premium assistance under Medicaid and CHIP for health coverage of the employee or the employee’s dependents. Here is the model notice which includes specific information for the 40 States this requirement currently applies to: Employer CHIP Model Notice. (Currently the notice does not apply to the following states: CT, DE, HI, IL, MD, MI, MS, OH, SD, and TN. The notice and list will be updated annually on the U.S. Department of Labor’s website to reflect any changes.)

For plan years beginning between February 4, 2010 through April 30, 2010, the Employer CHIP notice must be provided by May 1, 2010. For employers whose next plan year begins on or after May 1, 2010, the Employer CHIP notice must be provided by the first day of the next plan year (January 1, 2011 for calendar year plans).

For full details of the CHIP Model Notice requirements, click here: Federal Register CHIP Notice