There’s an important new tax credit available to businesses that may not be well known, but could potentially assist thousands of Tulare County businesses. The new Federal Hiring Incentives to Restore Employment (HIRE) Act was signed into law in March of this year, giving most employers an incentive to hire long-term unemployed. This credit generated quite a bit of interest the WIB’s quarterly Manufacturing Forum last month.
The HIRE credit allows employers an exemption on their portion of an employee’s Social Security contribution, starting on March 19, 2010 through the end of 2010, if:
· The employee was hired after February 3, 2010, and
· The employee had been unemployed for the previous 60 days from the date of hire.
The exemption, 6.2% of the employee’s wages, would equal nearly $1,300 for an employee hired July 1 of this year and works through the end of the year. The credit is applicable to all private employers, both for-profit and non-profit. Public colleges and universities also qualify to take advantage of the credit.
Additionally, for any qualifying employee who remains employed with the business for a full year, the business qualifies for an additional tax credit of $1,000.
Of course, a business should always consult their accountant or CPA when dealing with tax credits, but the process for claiming the credit is fairly simple – the employee at time of hire fills out a W-11 form. The business will have to file an additional Form 941 with its quarterly payroll taxes.
For more information, the IRS website has details of the program.
This program is in addition to other hiring incentives currently available in Tulare County, the Work Opportunity Tax Credit (WOTC), a federal credit available to all employers, and the Business Incentive Zone (BIZ), a lucrative state hiring credit currently available to industrial firms (manufacturing, warehouse/distribution, trucking/transportation) in the county.
The WOTC program offers credits for new employees who qualify in one of several possible “target groups who experience barriers to employment.” This includes long-term unemployed, those who receive federal assistance, ex-offenders, and similar areas. Forms that would need to be filed would include an IRS Form 8850, Employment and Training Administration (ETA) Form 9061, and ETA Form 9062.
The BIZ program seeks to employ similar types of workers, but offers a much higher credit. Any manufacturer, distribution center, trucking company, or machine shop in Tulare County not currently taking advantage of the BIZ credit should consider it. Though the program will sunset in 2011, it will be replaced by the Sequoia Valley Enterprise Zone, which will provide similar state tax credits.
The WIB has developed a PowerPoint presentation outlining these credits, or log on to the WIB’s website, www.tularewib.org, for more information.
