Published 4/30/2010
THE FEDERAL HIRE ACT Hiring Incentives to Restore Employment WAS SIGNED INTO LAW BY
PRESIDENT OBAMA ON 3/18/10, THE PURPOSE OF WHICH IS TO STIMULATE THE HIRING OF
NEW PERSONNEL. THE ACT PROVIDES INCENTIVES TO EMPLOYERS IN TWO WAYS:
6.2% Social Security Exemption on New Hires
This exemption applies to new employees hired after 2/3/10 and before 1/1/11, affecting wages
paid after 3/18/10 and before 1/1/11. The employees must not have worked more than 40 hours
in the 60 days preceding the commencement of employment with you, the new employer; and
the newly hired employee must sign an affidavit to that effect (the form design is currently “under
construction” at the IRS). Employees that do not qualify for the credit include relatives and employees
that were hired to replace terminated employees, unless the terminated employee voluntarily
left their position or was terminated for cause.
The exemption allows employers to take a credit on the employer portion of the Social Security
portion of FICA taxes, that is to say 6.2% of FICA taxable wages up to the 2010 wage base
of $106,800. That means that each new, qualified employee can earn a credit for the hiring
employer of up to $6,622 per newly hired employee in 2010.
The credit allowed by this exemption will be handled similarly to the way the COBRA reimbursement
is being handled. In other words, you, the employer, will not have to wait for a refund
weeks off into the future. IOI will be able to credit these funds back to you immediately upon
processing your payroll. Once the employer identifies which newly hired employees qualify for
the FICA exemption credit, an IOI Customer Service Representative will show you how to setup
these qualified employees to automatically capture the credit. In addition, the Rep can share
how IOIPay can assist with the administrative and compliance requirements of the HIRE Act.
New Hire Retention Credit
The new Hire Retention Credit is an incentive available to employers if they retain their qualifying
employees for at least a 52 consecutive week period. This is a general business credit to encourage
retention of your newly hired employees. In addition to the 52 consecutive week rule, wages for
the second 26 week period must be at least 80% of the first 26 week period. A credit up to $1,000
(lesser of $1,000 or 6.2% of FIT wages) is allowed on your corporate income tax return for the 2011
tax year for each qualified employee that meets the requirements.
CONTACT IOI’s TAX CREDIT SERVICES GROUP FOR ASSISTANCE IN
OBTAINING YOUR NEW HIRE RETENTION CREDIT AT 1.888.697.0021
OR BY EMAILING TaxCreditServices@ioipay.com