New Law Provides Payroll Tax Incentive for Hiring Unemployed Workers (3/18/10)
Posted: Monday, March 22, 2010 |  Printer Friendly
Form 941, Employer's Quarterly Federal Tax Return, will be revised for second quarter filings as President Obama signed legislation (H.R. 2847) creating a 6.2 percent payroll tax incentive for employers hiring qualified unemployed workers beginning Feb. 3, 2010.
Employers hiring individuals who attest to being unemployed for at least 60 days, beginning Feb. 3, 2010, and ending Dec. 31, 2010, will not be required to remit the employer share of the 6.2 percent Old Age, Survivors, and Disability Insurance (OASDI) portion of Federal Insurance Contributions Act, or Social Security, contributions for those individuals while they are employed for 2010. While the employer gets to exempt its share of the OASDI portion of FICA, withholding and payment of the employee's share of OASDI is still required, as are both shares of the Medicare (HI) portion of FICA.
In addition, under the new law, employers retaining such employees for 52 weeks may be eligible for an additional $1,000 credit off corporate taxes.
The Internal Revenue Service has been tracking this legislation and is “ready to go” to provide guidance to employers on the new provision, Tuzynski, IRS chief of employment tax operations, Small Business/Self-Employed Division, said March 12 at the American Payroll Association's Capital Summit, held in Washington, D.C.
Adjustments to second quarter Forms 941 will be necessary for qualified employers to claim the credit, Tuzynski said. He also noted that any first quarter credit amounts (from Feb. 3 to March 31) would be treated as a payment for the second quarter and would need to be claimed on the second quarter Form 941 filing.http://www.irs.gov/newsroom/article/0,,id=220326,00.html
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