IRS has released Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit. Newly hired, but formerly unemployed, workers must sign this form (or its equivalent) in order for their new employers to qualify for a payroll tax holiday and possibly an up-to-$1,000 credit under the HIRE Act ( P.L. 111-147 ).
Under the HIRE Act employers are exempted from paying the employer 6.2% share of Social Security employment taxes on wages paid in 2010 to newly hired qualified individuals. These are workers who: (1) begin employment with the employer after Feb. 3, 2010 and before Jan. 1, 2011, (2) were previously unemployed, (3) do not replace other employees of the employer (unless those employees left voluntarily or for cause), and (4) aren’t related to the employer under special definitions. The payroll tax relief applies only for wages paid with respect to employment beginning on Mar. 19, 2010 (the day after the HIRE Act was signed into law by the President) and ending on Dec. 31, 2010.
The payroll tax holiday doesn’t apply for wages paid during the first calendar quarter of 2010. Instead, the amount by which the qualified employer’s OASDI tax for wages paid during the first calendar quarter of 2010 would have been reduced if the payroll tax holiday had been in effect for the first quarter is treated as a payment against the employer’s OASDI tax for the second calendar quarter of 2010.
HIRE Act Sec. 103 provides employers with an up-to-$1,000 tax credit for retaining qualified individuals. The workers must be employed by the employer for a period of not less than 52 consecutive weeks, and their wages for such employment during the last 26 weeks of the period must equal at least 80% of the wages for the first 26 weeks of the period.
For a worker to be treated as previously unemployed, he must certify by signed affidavit, under penalties of perjury, that he hasn’t been employed for more than 40 hours during the 60-day period ending on the date the individual begins employment with the qualified employer. New Form W-11. The new form, consisting of only a few lines, is a statement by the new employee certifying that he meets the statutory unemployment requirement. The employee fills out his name, social security number, first date of employment with the new employer, and the latter’s name, and signs it under penalties of perjury. The employer is cautioned not to submit the form to IRS but, rather, to keep it with other payroll and income tax records.
Submitted by Jim Ventriglia of James P. Ventriglia, CPA, Inc. or Cranston, RI. James P Ventriglia, MST, CPA, is DDIFO’s CPA and has been servicing the accounting needs of Dunkin’ Donuts franchisees for decades. For more information contact him at firstname.lastname@example.org or at 401-942-0008.
Related reading at ddifo.org: HIRE Act Aims to Encourage Immediate Hiring with Tax Credits