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.
Under the HIRE Act, employers are required “get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period.” According to the IRS, work performed as self-employed individual does not count toward the forty hours or less that an employee must have worked in the sixty day period in order to be a qualified individual.
Employers should review employees who may have been disqualified under the mistaken belief that work performed as a self-employed individual counted toward the forty hours test.