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New Hire Act 2010

President Obama has signed into law the Hiring Incentives to Restore Employment (HIRE) Act, which is focused on
accelerating the hiring of unemployed workers.The HIRE Act hasmany provisions that impact employers, including a
payroll tax exemption and increased tax credits for employers that meet certain eligibility requirements. The legislation immediately enhances employers’ cash flow by permitting employers to retain the employer portion of the Social Security tax ordinarily remitted.
Social Security Tax Exemption
The 6.2% Employer Social Security Tax exemption applies to 2010
wages paid afterMarch 18, and before January 1, 2011, to individuals
hired after February 3, 2010, who were previously unemployed for at
least 60 days and who do not exceed the $106,800 Social Security
wage base.
• Employers can save the 6.2%Employer Social Security Tax,whether
they hire a $40,000worker or a $90,000worker. Employers, including
nonprofit organizations, and colleges and universities, would not
have towait until 2011 to benefit fromthis tax relief because savings
would accrue with each payroll processed.
• The legislation also encourages businesses to hireworkers earlier
in the year because the tax benefit will be greater. For example, a
$60,000 worker hired on April 1, 2010 saves an employer about
$2,800 in taxes. Delaying the hiring until June 1 would reduce the
savings to about $2,200.
• This exemption has no cap or limit as to the total amount of tax
benefits that can be claimed by an employer. Employers can save
up to $6,622 per qualifying worker, whether they hire one worker
or hundreds of new workers.
Tax Credit
Employers will receive an income tax credit which is either $1,000
for each qualifying worker hired after February 3, 2010, and
employed for at least 52 consecutive weeks, or 6.2%of wages paid
to the qualifying worker over the 52-week period, whichever is
less. Wages during the last 26 weeks must be at least 80 percent
of wages paid for the first 26 weeks.
• Any new hire must certify “by signed affidavit,” under penalties
of perjury, that he/she has “not been employed for more than 40
hours during the 60-day period ending on the date such individual
begins such employment.”
• Neither the 6.2% Employer Social Security Tax exemption nor
the retention tax credit is permitted if a person is hired to
replace another employee “unless such other employee is
separated from employment voluntarily or for cause.”

President Obama has signed into law the Hiring Incentivesto Restore Employment (HIRE) Act, which is focused onaccelerating the hiring of unemployed workers.The HIRE Act hasmany provisions that impact employers, including apayroll tax exemption and increased tax credits for employers thatmeet certain eligibility requirements. The legislation immediatelyenhances employers’ cash flow by permitting employers to retainthe employer portion of the Social Security tax ordinarily remitted.Social Security Tax ExemptionThe 6.2% Employer Social Security Tax exemption applies to 2010wages paid afterMarch 18, and before January 1, 2011, to individualshired after February 3, 2010, who were previously unemployed for atleast 60 days and who do not exceed the $106,800 Social Securitywage base.• Employers can save the 6.2%Employer Social Security Tax,whetherthey hire a $40,000worker or a $90,000worker. Employers, includingnonprofit organizations, and colleges and universities, would nothave towait until 2011 to benefit fromthis tax relief because savingswould accrue with each payroll processed.• The legislation also encourages businesses to hireworkers earlierin the year because the tax benefit will be greater. For example, a$60,000 worker hired on April 1, 2010 saves an employer about$2,800 in taxes. Delaying the hiring until June 1 would reduce thesavings to about $2,200.• This exemption has no cap or limit as to the total amount of taxbenefits that can be claimed by an employer. Employers can saveup to $6,622 per qualifying worker, whether they hire one workeror hundreds of new workers.Tax CreditEmployers will receive an income tax credit which is either $1,000for each qualifying worker hired after February 3, 2010, andemployed for at least 52 consecutive weeks, or 6.2%of wages paidto the qualifying worker over the 52-week period, whichever isless. Wages during the last 26 weeks must be at least 80 percentof wages paid for the first 26 weeks.• Any new hire must certify “by signed affidavit,” under penaltiesof perjury, that he/she has “not been employed for more than 40hours during the 60-day period ending on the date such individualbegins such employment.”• Neither the 6.2% Employer Social Security Tax exemption northe retention tax credit is permitted if a person is hired toreplace another employee “unless such other employee isseparated from employment voluntarily or for cause.”

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