When Should a Company Hire an Unpaid Intern?
DO YOU NEED TO HIRE EMPLOYEES, BUT FEEL BAD YOUR COMPANY CANNOT AFFORD IT? HOW TO TAKE ADVANTAGE OF "THE HIRE ACT" - THE FEDERAL GOVERNMENT'S LATEST PROGRAM AIMED AT INCENTIVIZING COMPANIES TO HIRE UNEMPLOYED WORKERS AND REDUCING THE COST OF LABOR
On March 18, President Obama signed the Hire Act into law. In a nutshell, this new law provides employers with an incentive to hire previously unemployed workers. Specifically, it exempts qualifying employers from paying a portion of the payroll taxes with respect to new hires, and even gives the employer an income tax credit. This, unlike other recent congressional and executive actions, is a direct subsidy to companies.
Like any new law, there are many rules that you need to know about. Here are some key points:
The potential new hire must have been unemployed for at least 60 days prior to being hired by the qualifying employer.
The qualifying employer will be exempt from paying its entire 6.2% share of social security taxes on wages paid to the qualifying employee during the period beginning on March 19, 2010 and ending on December 31, 2010. This exemption is claimed on Form 941, and must be accompanied by an affidavit signed by the qualifying employee.
A tax credit applies if the company retains the worker for at least 52 weeks. This credit is equal to the lesser of $1,000 or 6.2% of wages paid during that 52-week period, and it will be claimed on the qualifying employer's 2011 income tax return.
Similar to other provisions of the federal government's stimulus bills, this law has a short shelf life; unless extended the tax exemption will expire on January 1, 2011. This law does not apply to household employees. There are provisions in the text of the law that prohibit the firing of an employee for the purpose of taking advantage of this law.
TO ENSURE COMPLIANCE WITH THE REQUIREMENTS IMPOSED BY THE IRS, WE INFORM YOU THAT ANY TAX ADVICE CONTAINED IN THIS COMMUNICATION, INCLUDING ANY ATTACHMENT TO THIS COMMUNICATION, IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY ANY TAXPAYER FOR THE PURPOSE OF (1) AVOIDING PENALTIES UNDER THE INTERNAL REVENUE CODE OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANY OTHER PERSON ANY TRANSACTION OR MATTER ADDRESSED HEREIN.
LISA CHAPMAN, WWW.RROYSELAW.COM/LISA_C.HTML
JON GOLUB, WWW.RROYSELAW.COM/JONATHAN_GOLUB.HTML