IMPORTANT PAYROLL TAX UPDATES     Two New Tax Benefits Aid Employers Who Hire and Retain Unemployed Workers     IR-2010-33, March 18, 2010 WASHINGTON — Two new tax benefits are now available to employers hiring workers who were previously unemployed or only working part time. These provisions are part of the Hiring Incentives to Restore Employment (HIRE) Act enacted into law today. Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages. In addition, for each worker retained for at least a year, businesses may claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns. “These tax breaks offer a much-needed boost to employers willing to expand their payrolls, and businesses and nonprofits should keep these benefits in mind as they plan for the year ahead,” said IRS Commissioner Doug Shulman. The two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify. In addition, the new law requires that the employer get a statement from each eligible new hire certifying that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for someone else during the 60-day period. The IRS is currently developing a form employees can use to make the required statement. Businesses, agricultural employers, tax-exempt organizations and public colleges and universities all qualify to claim the payroll tax benefit for eligible newly-hired employees. Household employers cannot claim this new tax benefit. Employers claim the payroll tax benefit on the federal employment tax return they file, usually quarterly, with the IRS. Eligible employers will be able to claim the new tax incentive on their revised employment tax form for the second quarter of 2010. Revised forms and further details on these two new tax provisions will be posted on IRS.gov during the next few weeks.      April 2009 IMPORTANT MESSAGE REGARDING COBRA PLANS AND YOUR FEDERAL EMPLOYER TAX DEPOSITS                   As part of the new economic stimulus plan employers are required to send employees who lost health insurance between September 1, 2008 and December 31, 2009 a notice informing them that their premium coverage can be reduced. This notice must be sent out by April 18, 2008.   The stimulus bill reduces the premium for COBRA for eligible individuals to 35 percent of full COBRA premiums for up to nine months.   In addition, people who were involuntary terminated on or after September 1, 2008 who did not elect COBRA when it was first offered or who did not elect COBRA will have a second opportunity.     Employer Responsibility: Initial Payment   Employers maintaining   health plans subject to COBRA will bear the initial cost of the subsidy and then obtain a reimbursement through a reduction in their Quarterly Federal Tax Return. (Form 941)         Please communicate with your payroll specialist if you have any former employees who are on or now eligible for COBRA.