A new Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, is available on IRS.gov, along with answers to frequently-asked questions about the payroll tax exemption and the related new hire retention credit. The new law requires that employers get a statement from each eligible new hire, certifying under penalties of perjury, that the individual has not been employed for more than 40 hours during the 60-day period ending on the date the individual began employment.
The IRS released draft Form 941, Employer’s Quarterly Federal Tax Return, for filing the second quarter tax return due on August 2, 2010. Several revisions were necessary because of the recent legislation in the “Hiring Incentives to Restore Employment Act” (HIRE Act, P.L. 111-47).
The second quarter draft version of Form 941 includes new reporting lines:
- Line 6a: Number of qualified employees hired or first paid this quarter.
- Line 6b: Number of qualified new employees who were paid wages this quarter.
- Line 6c: Exempt wages and tips paid this quarter.
- Line 6d: Line 6c × .062.
- Line 12c: Number of qualified individuals paid first quarter wages after March 18 and before April 1.
- Line 12d: Exempt first quarter wages and tips paid after March 18 and before April 1.
- Line 12e: Line 12d × .062.
The employment tax liability will be reduced by the amount that employers report on line 6d (Social Security tax exemption on new employees hired in second quarter 2010). The tax exemption for the period from March 19, 2010 to March 31, 2010 may not be claimed on the first quarter Form 941. The tax exemption that employers received in the first quarter of 2010 will be claimed on the second quarter revised Form 941 on line 12e and added to other credits that may be applied against an employer’s employment tax liability.
The tax liability reported on Form 941, Schedule B, Report of Tax Liability for Semiweekly Schedule Depositors, will reflect the exemption claimed on new employees hired in the second quarter of 2010. The second quarter Schedule B should not be adjusted to take into account the exemption claimed on new employees hired from March 19, 2010 to March 31, 2010.
Forms 941-PR, 941-SS, CT-1, and the amended forms in the “X” series will also be revised.
Revised versions of Forms W-2 and W-3 reflect changes under the new “Hiring Incentives to Restore Employment (HIRE) Act” (P.L. 111-147), were released by the Internal Revenue Service.
The revisions include a new code for box 12, Code CC, for employers to report the amount of wages and tips covered by the payroll tax exemption. The total of Code CC is reported in a new box 12b on Form W-3. The total of deferred compensation amounts, previously reported in box 12, is now reported in new box 12a on Form W-3.
As a reminder, a qualified individual is anyone who:
- Begins work for a qualified employer after February 3, 2010 and before January 1, 2011.
- Certifies by signed affidavit, under penalties of perjury, that the individual had not been employed for more than 40 hours during the 60-day period ending on the date the employment begins.
- Individual is not employed to replace another employee of the employer unless that former employee separated from employment voluntarily or for cause.
- Is not related to the employer described in section IRC 51(i)(1) (substituting ‘qualified employer’ for ‘taxpayer’).
Within the next few weeks we can expect more FAQ’s and helpful pieces of information to be available on the IRS website.
