For questions or to learn more: Alyshia Foster 214-461-1129 or alyshia.foster@staffone.com

The HIRE Act mmediately enhances employers’ cash flow by allowing employers to retain the employer portion of Social Security Tax. Read on as to be sure that you don’ t miss this opportunity as an employer to receive increased tax credits and payroll tax exemption.

With the recent passage of the Patient Protection & Affordable Care Act (H.R. 3590) and the Health Care & Education Affordability Reconciliation Act of 2010 (H.R. 4872), some employers may already be planning to limit growth as to not be affected by certain mandates of the new legislation. To comfort the fretting business owner, some alleviation has been signed into legislation in the form of tax credits.

On March 19, President Obama signed into legislation the Hiring Incentives to Restore Employment (HIRE) Act that creates a tax credit for the hiring of new employees. The law includes a payroll tax exemption and increased tax credits for employers that meet certain eligibility requirements. Under this new law, an employer that hires an employee after February 3, 2010 and before January 1, 2011, can receive a tax credit equal to the employer’s portion of the Social Security Tax. All employers, excluding government employers, are eligible to receive the credit. Public Institutions of higher education are the only government institutions that qualify for the tax credit.

To qualify for the 6.2% Employer Social Security Tax exemption under this legislation, an employer must hire an employee who has not been working for 40 hours per week for the past 60 days and whose 2010 earned wages after March 18, 2010 and before January 1, 2011 do not exceed $106,800. The exemption has no limit as to the total amount of benefits that can be claimed by an employer. An employer can save up to $6,622 per qualifying working no matter how many employees are hired.

In consideration of tax credits, employers will receive the lesser of $1000 or 6.2% of wages paid to the qualifying work. In order to qualify, an employee must have been hired after the initial start date (February 3) and remained on payroll for 52 consecutive weeks. Wages for the last 26 weeks of the period may not drop below 80% of the wages paid the first 26 weeks. Each eligible employee is expected to verify status per signed affidavit, under penalties of perjury, he or she has “not been employed for more than 40 hours during the 60-day period ending on the date such individual begins such employment.”

The legislation also encourages employers to hire sooner rather than later as the tax benefit will be greater. Neither the 6.2% Employer Social Security Tax exemption nor the retention tax credit is permitted if a person is hired to replace another employee, “unless such other employee is separated from employment voluntarily of for cause.” Additional benefits in the new legislation include: an allowance for small businesses to expense up to $250,000 of their taxable income through the end of 2010, an expansion for the eligibility of “Build America Bonds,” and it extends surface transportation policy through December, providing $19.5 billion for road construction and other infrastructure projects under the Highway Trust Fund.