The IRS has released a new form (Form W-11) for use by employers to claim the special payroll tax exemption under the Hiring Incentives to Restore Employment (HIRE) Act. The new law requires that employers get a statement from eligible new hires, certifying under penalties of perjury, that he or she was unemployed during the 60 days before beginning work, or worked fewer than a total of 40 hours for anyone during the 60-day period. The Form W-11 will meet those requirements.
Though employers need this certification to claim both the payroll tax exemption and the new hire retention credit, they do not file these statements with the IRS, but instead retain them along with other payroll and income tax records.
The HIRE Act created two new tax benefits designed to encourage employers to hire and retain new workers. As a result, 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 addition, for each unemployed worker retained for at least a year, businesses may claim a new hire retention credit of up to $1,000 per worker when they file their 2011 income tax returns.