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Draft Form W-11

Hiring Incentives to Restore Employment (HIRE) Act

2010 Payroll Tax Compliance Highlights

The Internal Revenue Service has released a draft Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit. The Form W-11 is being designed to help employers comply with the affidavit provision of the HIRE Act.

 

Employers must get a signed affidavit from each qualifying employee as proof that the employee has not had more than 40 hours of work over the most recent 60 days. Qualifying employees must be hired after February 3, 2010 and before January 1, 2011. Employers must retain the affidavits from qualified new hires with their employment records, but the IRS will not require affidavits to be submitted as part of the quarterly or year end tax reporting.

 

This version of Form W-11 is not approved for use in its current draft status and a final version is expected to be released the week of April 5th.

 

Draft Form W-11

The Hiring Incentives to Restore Employment (HIRE) Act or more commonly referred to as the jobs bill was passed by both the House and the Senate and signed into law by President Obama on March 18, 2010.

Following are the payroll-related highlights of the provisions that are were included:

• Social Security tax suspension for qualified employers at a rate of 6.2% up to the annual Social Security wage cap for 2010 of $106,800. THis amounts to a maximum annual hiring incentive of $6,621.6 per employee.
• Qualifying employees must be hired after February 3, 2010 and before January 1, 2011.
• Qualifying employees must have had not more than 40 hours of work over the most recent 60 days (ending on the employee's start date). Employers must get a signed affadavit from each employee as proof of compliance with this provision.
• The employer may not take the Social Security tax offset on employees hire to replace involuntarily terminated employees. Employees hired to replace employees terminated "for Cause" will qualify.
• An additional tax credit of 6.2 percent of Social Security wages, not to exceed $1,000, for each qualifying employee retained for at least 52 weeks may be taken on the employer's business return.

IRS has indicated that a new line item will be added to Form 941, Employer's Quarterly Federal Tax Return, to accommodate the new employer Social Security tax credit. A provision in the latest admendments to the bill would prevent the tax credit from being taken in the first quarter of 2010 but any earned credit may be carried forward to a later quarter in 2010.

2010 Payroll Highlights Summary is a reference summary of important payroll related rates/limits for 2009. Select the link below for more information.

2010 Payroll Tax Compliance Highlights