HIRE Act Enacted to Help Reduce Unemployment
On March 18, 2010 the President signed into law the Hiring Incentives to Restore Employment (HIRE) Act, using Federal tax incentives to try to reduce current unemployment. More tax legislation to encourage job creation is expected.
The major incentives provided by the HIRE Act are:
- An exemption to an employer from paying its share of Social Security tax on wages paid to a qualified unemployed worker after March 18, 2010 and before January 1, 2011. A qualified unemployed worker is a person who (1) begins employment with the employer after February 3, 2010 and before January 1, 2011, (2) was unemployed for the 60-day period before beginning work, and (3) does not replace another employee of the employer unless the employee being replaced left voluntarily or for cause. The employer exemption applies to taxable businesses as well as not-for-profit organizations and also appears to apply to start-up employers hiring employees for the first time.
- A $1,000 tax credit in 2011 for each qualified unemployed worker who remains on the employer’s payroll for at least 52 consecutive weeks and whose salary for the last 26 week period is at least 80 percent of the worker’s salary for the first 26 week period.
- An extension to 2010 of the higher limits provided in 2009 that a business can elect to deduct depreciable tangible personal property (including off-the-shelf computer software). For property placed in service in 2010 a business can elect to deduct up to $250,000 of the cost of qualifying property, with a dollar-for-dollar reduction of this amount to the extent that qualifying property in excess of $800,000 is placed in service.
To help pay for this legislation, the HIRE Act also includes provisions that require offshore financial institutions to disclose its U. S. account holders to the U. S. government. It is intended that this legislation will make it more difficult for taxpayers to conceal assets and income in foreign banks.