Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are exempt from certain employment taxes. In order to qualify under the HIRE Act, the wages must be paid by a qualified employer “with respect to employment” in the period beginning March 19, 2010 and ending December 31, 2010. The Internal Revenue Service (IRS) has provided employers further information on the HIRE Act.
According to the IRS, the HIRE Act does not address when an individual begins employment; therefore, general principles relating to employment apply. Under these general principles, employment includes the establishment, maintenance, and termination of the employer-employee relationship, all of which depend on the facts and circumstances. Accordingly, an individual begins employment on the date when, based on the facts and circumstances of the particular situation, the employer-employee relationship is first established.
In the case of an individual who was previously employed by the qualified employer and whose employment was terminated, for purposes of determining qualified employee status, the individual begins employment on the date when, based on the facts and circumstances of the particular situation, the employer-employee relationship is reestablished.