May 21, 2010

IRS Releases Revised Form 941 to Reflect HIRE Act Payroll Tax Exemption

As mentioned in a previous Client Alert, under the “Hiring Incentives to Restore Employment Act” (the “HIRE Act”), employers who hire unemployed individuals between February 3, 2010 and December 31, 2010 may be eligible for (1) an exemption of the 6.2% Social Security payroll tax contribution for that individual, and (2) an additional tax credit of up to $1,000.

The IRS has released a revised Form 941 (Employer’s Quarterly Federal Tax Return) to reflect the 2010 payroll tax exemption for hiring unemployed workers. The revised Form 941 may be used by employers claiming the payroll tax exemption beginning with the second calendar quarter of 2010. The instructions for the new Form 941 also explain how the credit for wages paid from March 19, 2010 through March 31, 2010 can be claimed on the second quarter return.

The revised Form 941 and instructions are now available on the IRS website. In addition, details on both the payroll tax exemption and the tax credit can be found in the frequently asked questions posted on the IRS website.

For more information on the HIRE Act, contact your SGR Executive Compensation and Employee Benefits counsel.

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