The federal Internal Revenue Service, on May 18, released a revised Form 941, “Employer’s Quarterly Federal Tax Return” that employers can use to take advantage of a Social Security payroll tax exemption under the federal Hiring Incentives to Restore Employment Act. The HIRE Act provides employers the exemption and a tax credit for certain new hires who begin employment between Feb. 4 and Dec. 31, 2010. Employers can use the new form to claim the exemption for wages paid beginning with the second calendar quarter of 2010; a credit for wages paid in the first quarter (from March 19 through March 31, 2010) can be claimed on the second quarter return.

Additional Information:

• IRS notice of revised Form 941
• Form 941, “Employer’s Quarterly Federal Tax Return”
• Instructions for Form 941

President Obama on March 18 signed the Hiring Incentives to Restore Employment Act (H.R. 2847), which includes a tax credit for certain new hires retained by employers and a Social Security payroll tax exemption for such new hires. Under the HIRE Act, employers generally can take a tax credit of up to $1,000 for each new hire who begins employment between Feb. 4 and Dec. 31, 2010, and attests to being unemployed for at least 60 days prior to such employment (or having worked less than a total of 40 hours during the 60-day period). These employees must be employed for at least 52 consecutive weeks and earn wages during the last 26 weeks of such period equal to at least 80 percent of wages paid during the first 26 weeks. Employers cannot replace employees with these new hires unless the employees have left employment voluntarily or for cause. In addition, employers can exempt their share of Social Security payroll taxes in 2010 for these new hires.

More information can be found at http://thomas.loc.gov/cgi-bin/bdquery/z?d111:H.R.2847: