Employers wait on certification form for new HIRE Act tax incentives

The recently enacted Hiring Incentives to Restore Employment (HIRE) Act rewards employers who hire qualified unemployed workers with payroll tax forgiveness and a worker retention tax credit. However, the newly hired worker must certify that he or she meets specific unemployment criteria; otherwise, the employer will be ineligible for payroll tax forgiveness and the tax credit. Congress instructed the IRS to design a certification form and the agency has announced that the form will be available soon.

Payroll tax forgiveness/tax credit

The HIRE Act provides qualified employers with an exemption from having to pay its share of Old-Age Survivors and Disability Insurance (OASDI) (Social Security) taxes for a covered worker's employment after March 18, 2010 and before January 1, 2011. Covered employees who are eligible for payroll tax forgiveness and who remain on the payroll for 52 consecutive weeks may qualify their employer for the new worker retention tax credit.

Certification

Congress intended the HIRE Act to help individuals who have been unemployed for more than just a short time. Therefore, it imposed a certification requirement. The individual must certify by signed affidavit and under penalties of perjury that he or she has not been employed for more than 40 hours during the 60-day period ending on the date that his or her employment with the qualified employer begins.

IRS response

Almost immediately after President Obama signed the HIRE Act on March 18, 2010, employers began asking how individuals would satisfy the certification requirement. The IRS responded that it is developing a certification form.

The IRS, however, did not indicate when the certification will be available. It is expected that the IRS will post the certification form on its web site (www.irs.gov) in the near future. Our office will keep you posted of developments. Please contact our office if you have any questions.

IR-2010-33