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FacebookThe Senate passed H.R. 2847, Hiring Incentives to Restore Employment (HIRE) Act, by 68-29 today.
The bill now goes to the President and the 6.2 percent FICA forgiveness credit will go into effect on the day after the President signs the bill, for wages paid to qualified workers hired after February 3rd. The original HIRE bill was passed by the Senate and amended by the House, so when the Senate passed the bill today it accepted the bill as changed by the House amendment.
Under the Act as written, employers will pay regular FICA tax on all employees during the first calendar quarter of 2010. At the same time, they will book their FICA forgiveness credit for qualified new hires made during the first quarter, and apply it as a credit to their FICA tax for the second quarter. By that time, Treasury regulations will have been written and the manner of claiming the credit for second quarter hires will be known.
To be able to claim the FICA forgiveness and employee retention credits, employers will need to screen their employees to determine those hired after February 3rd who will be able and willing to certify under penalty of perjury that they had not worked more than 40 hours during the 60 days prior to beginning work for the employer. Employers must obtain and retain copies of such certification to support their claim for the HIRE credits.
Employers will also have to certify, for each qualified employee, that the employee was not hired to replace another employee unless such other employee separated voluntarily or for cause. Following the explanation provided by the Joint Committee on Taxation in JCX 4-10, “for cause” includes workers who may have previously worked for the employer but were laid off for economic reasons.
MARS STOUT has implemented the necessary changes to begin screening for these new incentives as soon as the President signs this legislation and we’ll keep your apprised as additional procedural guidelines become available.