The HIRE Act

While the HIRE Act has expired for employees hired after 12/31/2010, if your company did not take advantage of the exemption, it may do so retroactively.  Contact Roy Goldman for more information.

The HIRE Act provides an incentive for qualified unemployed individuals hired on or after February 4, 2010.  The incentive exempts the employer portion of Social Security Tax for all 2010 wages to any new hire who was employed for 40 hours or less during the 60 day period prior to hire.

If you would prefer to view our March 2010 Webinar, click on the link that follows: The HIRE Act (approximately 40 minutes)

Executive Summary

To claim the exemption, the Employee must provide the Employer with a written affidavit attesting to their unemployed status during the time frame.  When the new employee is filling an open position, the employer may claim the exemption only if the person replaced by the qualified employee was a voluntary separation or was terminated with cause.

The HIRE Act exemption is open to all trades and businesses, including not-for-profit institutions such as schools, hospitals and universities.  Only federal, state and local governments are excluded.

When the individual dually qualifies for the Work Opportunity Tax Credit, the Employer may only elect to claim the WOTC Credit or the HIRE Act Exemption in the first year of employment. In addition to the Social Security Tax exemption, for-profit companies may qualify for a tax credit of up to $1,000 for all qualified employees who remain employed for more than 1 full year.  At the end of the 52 week period, the employer may claim a tax credit equal to 6.2 percent of wages paid to the individual during the one year period or $1,000, whichever is less.  Since it is a tax credit, this incentive only applies to trades or businesses paying federal corporate income tax.

Qualified employers may claim the second year retention credit regardless of whether they claimed WOTC or the HIRE Exemption in the first year.  Should the certified employee qualify for a second year WOTC credit under the Title IV-A Long-Term TANF Recipient ‘Target Group,’ the Employer may claim the second year WOTC regardless of whether first year WOTC or the HIRE Exemption was claimed in the first year.

NTCI makes claiming the HIRE payroll tax exemption EASY!

  • We will screen all individuals hired on or after February 4, 2010 for HIRE Act eligibility
  • For those who qualify, we will obtain and retain the required affidavit and any other documentation required by IRS
  • For WOTC clients, we will assess all cases where there is dual eligibility and select the incentive most beneficial to the employer
  • NTCI will prepare all calculations and reports to file for the exemption on the 941 or a refund on the 941-X as well as forms and tax inserts for the second year retention credit
  • We will also monitor Treasury for any additional regulatory requirements that may develop

Frequently Asked Questions

For more information contact us.