President Obama recently signed into law the Hiring Incentives to Restore Employment (HIRE) Act. The legislation exempts employers from paying Social Security payroll tax for "qualified employees" in 2010 and offers a $1,000 tax credit to employers who continue to employ "qualified employees" after one full year.
On April 7, 2010, the Internal Revenue Service (IRS) issued Form W-11, the HIRE Act Affidavit. The form, when completed, establishes that a new hire may be a "qualified employee" for purposes of the HIRE Act. Form W-11 may be accessed on the IRS's Web page at http://www.irs.gov/pub/irs-pdf/fw11.pdf.
In addition to completing a Form W-11 or similar affidavit, for someone to be a "qualified employee," he or she must be hired between February 4, 2010, and December 31, 2010, but cannot be hired to replace a former employee unless that employee resigned or was discharged for cause. In addition, the new hire cannot be related to the employer.