On March 18, President Obama signed the Hiring Incentives to Restore Employment Act (“HIRE”) — the government’s latest $17.5 billion effort to reduce unemployment and jumpstart the job market. Also known as the “Jobs Bill,” HIRE provides significant tax incentives for “qualified” employers who hire previously unemployed or part-time “qualified employees.” Employers may receive a 6.2 percent payroll tax exemption for the employer’s share of Social Security taxes and may also receive a “retention credit” — a tax credit of up to $1,000 — for each newly hired worker if the employee remains employed for at least one year. The optimistic goal is to provide hiring incentives to restore jobs lost in the economic downturn. While noble in purpose, it is imperative for employers to understand what is required to obtain the bill’s benefits, so they can structure their tax, payroll and human resources departments and fiscally plan for the remainder of the year.
HIRE casts a broad net for employers, allowing any taxable or tax-exempt private-sector employer (including nonprofit businesses and new businesses) and public higher education institutions to enjoy its benefits. Federal, state and local government employers and instrumentalities other than public higher education institutions are excluded from HIRE’s coverage. Moreover, household employers do not qualify for benefits.
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