Hiring Incentives to Restore Employment (HIRE ACT)
The Hiring Incentives to Restore Employment Act was introduced in Washington D.C. on February 3, 2010 to address the ever increasing number of Americans who are without jobs. The government wanted to create an incentive for employers to expand their workforce. The bill became law on March 18, 2010. 

There are 2 potential tax benefits as part of the HIRE Act:

1.  Payroll Tax Exemption for Hiring Unemployed Workers

The HIRE Act provides a payroll tax exemption from the employer's 6.2% share of the Social Security tax on wages paid to qualifying employees. Wages that may be used to calculate the payroll tax exemption are those wages paid from March 19, 2010 through December 31, 2010 for qualifying employees hired after February 3, 2010 and before January 1, 2011. Social Security tax is paid on the first $106,800 of taxable earnings, so the HIRE Act provides a maximum payroll tax exemption of $6,621.60 per employee. The new employee must sign an affidavit, subject to penalty of perjury, that they have not worked more than 40 hours during the 60 days prior to the date they started work. 

Unlike WOTC, which may only be claimed by for-profit companies, the payroll tax exemption can be claimed by not-for-profit companies, hospitals, universities, charities, non-governmental organizations, etc. who have to pay payroll taxes.   
These exemptions will be claimed on the quarterly Form 941 Payroll Tax Return with the first opportunity coming to claim these exemptions in July, 2010. 

Employers may not receive the 6.2% payroll tax exemption for any individual who has been claimed for WOTC. SimTax will work on a case by case basis to maximize our client's total savings but generally speaking, WOTC will be a far more lucrative tax credit. 

2.  Retention Bonus Tax Credit

If an employee who qualifies for the payroll tax exemption is retained for at least 52 consecutive weeks, a business will also be eligible for a general business tax credit of $1,000 or 6.2% of their wages for the year, whichever is less. These individuals must have started working after February 3, 2010, but before January 1, 2011. During their second 26 weeks of employment, they must have earned at least 80% of what was earned during the first 26 weeks of employment. 

As with WOTC, this retention bonus tax credit will be used to offset Federal Income Tax liability. As a result, the retention bonus tax credit will not apply for not-for-profit organizations.

These credits may not be carried back, but may be carried forward.

The retention bonus tax credit will apply even for employees who are being claimed for WOTC.