According to a report issued this week by the Treasury Department, employers who have hired previously unemployed workers this year are eligible for an estimated $10.4 billion in tax breaks under the Hiring Incentives to Restore Employment (HIRE) Act. The Act, which was enacted in March of this year, provides payroll and business tax incentives to qualified employers who hire and retain new workers. To be eligible for these incentives, employers must have hired workers who were unemployed (or worked no more than a total of 40 hours) in the 60-day period leading up to their employment. Affidavits, which qualified workers must complete and sign certifying their unemployed status in the prior 60-day period, are available on the IRS website. For each worker hired after February 3, 2010 and before January 1, 2011, qualified employers may claim a 6.2 percent payroll tax exemption for wages paid to these workers after March 18, 2010. In addition, as an incentive for employers to retain workers hired under the Act, the law allows eligible employers to claim an additional general business tax credit of up to $1,000 for each worker retained for at least a year.
According to the Treasury Department report, between February and June 2010 employers hired an estimated 5.6 million workers that would be covered by the Act’s provisions. The report explains that if these workers remain employed for the remainder of 2010, their employers will be eligible for $6.2 billion in tax exemptions under the Act, and if three-quarters of them remain employed for a year, their employers will be eligible for an additional $4.2 billion in tax credits. For employers who are already planning to increase their workforce, or are looking for reasons to do so, there is still time to take advantage of these tax incentives, which will apply through the remainder of 2010.