Vision Payroll

October 15, 2010

Question of the Week: What Is the Impact of a Temporary Layoff on the HIRE Act Incentives?

What is the Impact of Temporary Layoff on the HIRE Act Incentives?
What is the Impact of Temporary Layoff on the HIRE Act Incentives?
This week’s question comes from Andrea, an HR director. We hired an employee who qualified for the HIRE Act Incentives, including payroll tax forgiveness. We had to lay him off temporarily and don’t know if he still qualifies under his previous layoff or if he needs to requalify. What is the impact of temporary layoff on the HIRE Act incentives? Answer: Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are exempt from certain employment taxes and may receive other tax benefits. In order to qualify under the HIRE Act, employers are required to “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.” Workers who are temporarily laid off may or may not have to requalify and fill out a new Form W-11 or the Spanish-language equivalent, Form W-11(SP).

IRS Addresses Issue in Information Letter 2010-0198

The Internal Revenue Service (IRS) addressed this issue in Information Letter 2010-0198. According to the IRS:

An individual who is already a qualified employee and who experiences a short term or temporary interruption in his or her performance of services continues to be a qualified employee unless the interruption constitutes a termination of employment. Whether a short term or temporary interruption of an employee’s performance of services constitutes a termination of employment depends on the facts and circumstances. In the case of an individual who was previously employed as a qualified employee and whose employment is terminated, the employee will have to again meet the requirements for qualified employee status at the time the employment relationship is reestablished.

Documentation Is Key to Support Employer Position

Vision Payroll recommends that employers document thoroughly why a “temporary interruption” was not a termination of employment if they do not requalify an employee under the HIRE Act. Consultation with a qualified labor law attorney to determine when employment terminates is strongly recommended.

September 17, 2010

Question of the Week: Can We Still Claim a HIRE Act Credit for the Second Quarter?

Can We Still Claim a HIRE Act Credit for the Second Quarter?
Can We Still Claim a HIRE Act Credit for the Second Quarter?
This week’s question comes from Phil, a small-business owner. We just realized that one of our employees who we hired in April is eligible for the HIRE Act Credit. Can we still claim a HIRE Act credit for the second quarter? Answer: 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.

HIRE Act Credit Still Available for Second Quarter

Employers may still claim the credit for the second quarter by filing Form 941-X, Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund.

IRS Releases Revised Form 941-X to Claim HIRE Act Credit for Previous Quarters

On September 11, 2010, the Internal Revenue Service (IRS) released a revised Form 941-X which employers can use to claim the HIRE Act credit for previous quarters. The new form adds lines 11a-11c to adjust for the credit. The new lines are for the following:

  • 11a.    Number of qualified employees first paid exempt wages/tips this quarter.
  • 11b.    Number of qualified employees paid exempt wages/ tips this quarter.
  • 11c.    Exempt wages/tips paid to qualified employees this quarter.

Vision Payroll Is Ready to Help

Contact Vision Payroll if you need assistance filing Form 941-X to claim the HIRE Act credit for previous quarters.

August 22, 2010

Replacing Employees Who Are Terminated for Poor Performance Under the HIRE Act

Replacements for Employees Terminated for Poor Performance May Qualify Under the HIRE ACT
Replacements for Employees Terminated for Poor Performance May Qualify Under the HIRE ACT
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.

Replacing Poor Performers Not a Bar to Payroll Tax Forgiveness Under the HIRE Act

Under the HIRE Act, employees who are hired to replace other employees are generally not eligible to be qualified employees. One exception to this rule is for employees hired to replace other employees who were terminated due to poor performance. If they otherwise meet the qualification standards, such employees are qualified employees under the HIRE Act.

Review Recent Hires to See if Any Qualify for Payroll Tax Forgiveness Under the HIRE Act

Employers should review employees who were hired to replace employees who were terminated due to poor performance to see if they otherwise qualify and are therefore eligible under the HIRE Act.

Vision Payroll Helps Employers Claim Payroll Tax Forgiveness

Contact Vision Payroll if you have further questions on the HIRE Act.

August 17, 2010

Replacing Employees Who Are Terminated for Gross Misconduct Under the HIRE Act

Replacements for Employees Terminated for Gross Misconduct May Qualify Under the HIRE ACT
Replacements for Employees Terminated for Gross Misconduct May Qualify Under the HIRE ACT
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, employees who are hired to replace other employees are generally not eligible to be qualified employees. One exception to this rule is for employees hired to replace other employees who were terminated due to gross misconduct. If they otherwise meet the qualification standards, such employees are qualified employees under the HIRE Act.

Employers should review employees who were hired to replace employees who were terminated due to gross misconduct to see if they otherwise qualify and are therefore eligible under the HIRE Act.

Contact Vision Payroll if you have further questions on the HIRE Act.

August 16, 2010

Replacing Employees Who Voluntarily Terminate Employment Under the HIRE Act

Replacements for Employees Who Voluntarily Terminate Employment May Qualify Under the HIRE ACT
Replacements for Employees Who Voluntarily Terminate Employment May Qualify Under the HIRE ACT
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, employees who are hired to replace other employees are generally not eligible to be qualified employees. One exception to this rule is for employees hired to replace other employees who terminated employment voluntarily. If they otherwise meet the qualification standards, such employees are qualified employees under the HIRE Act.

Employers should review employees who were hired to replace employees who terminated voluntarily to see if they otherwise qualify and are therefore eligible under the HIRE Act.

Contact Vision Payroll if you have further questions on the HIRE Act.

August 14, 2010

Hiring Self-Employed Individuals and Claiming the HIRE Credit

Hours Worked as a Self-Employed Individual Do Not Count as Employment for HIRE Act Test
Hours Worked as a Self-Employed Individual Do Not Count as Employment for HIRE Act Test
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.

Contact Vision Payroll if you have further questions on the HIRE Act.

August 10, 2010

Resuming Active Status Under the HIRE Act

Rehired Employees May Qualify for Payroll Tax Exemption Under the HIRE Act
Rehired Employees May Qualify for Payroll Tax Exemption Under the HIRE Act
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 payroll tax exemption applies to an employee who has been on furlough, standby status or temporary layoff “only if the furlough, standby status, or temporary layoff constitutes a termination of employment and, upon reestablishment of the employment relationship, the requirements to be a qualified employee are satisfied. Whether the employment relationship has terminated is based on facts and circumstances.” An earlier post reviewed when employment begins for purposes of the HIRE Act.

Employers should review employees who have been on furlough, standby status or temporary layoff and determine if the rehired employee is eligible under the HIRE Act.

Contact Vision Payroll if you have further questions on the HIRE Act.

August 3, 2010

“Begin Employment” Under the HIRE Act

HIRE Act Hiring Form for Employee Beginning Employment Payroll Worcester County
New Hire Information
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.

Contact Vision Payroll if you have further questions on the HIRE Act.

March 27, 2010

Qualifying Wages Under the HIRE Act

Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay 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. Additionally, the wages must be “for services performed…in a trade or business of such qualified employer” or for exempt employers, “in furtherance of the activities related to the purpose or function constituting the basis of the employer’s exemption under section 501.” Contact Vision Payroll if you have further questions on the HIRE Act.

March 26, 2010

Question of the Week: How Does the HIRE Act Affect Employees’ Future Social Security Benefits?

This week’s question comes from Sean, an HR director. We are in the process of hiring some employees who would allow us to claim exemption from paying the employer’s share of social security taxes because of the HIRE Act. Some employees are hesitant due to the impact on their future social security benefits. How does the HIRE Act affect employees’ future social security benefits? Answer: Under the Hiring Incentives to Restore Employment Act (HIRE Act), employers who hire certain unemployed workers are allowed not to pay certain employment taxes. Although employers may be exempt from paying the taxes, there is no impact on any employee’s future social security benefits. Contact Vision Payroll if you have further questions on the HIRE Act.

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