IRS Releases Form W-11 Affidavit

Posted on April 8, 2010 by Ilyse Schuman

Hand writing on clipboardThe Internal Revenue Service (IRS) has made available Form W-11 (pdf), the Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit employees are to use confirm that they are “qualified” employees under the HIRE Act. An employer seeking to benefit from the HIRE Act’s payroll tax holiday or retention tax credit must have employees complete form W-11 or a similar form to attest that they began employment after February 3, 2010, and before January 1, 2011; have not been employed for more than 40 hours during the 60-day period ending on the date they begin employment with the employer seeking the HIRE Act benefits; are not being employed to replace another employee unless the other employee separated from employment voluntarily or for cause (including downsizing); and are not related to the employer seeking the tax benefit.

According to a press release, while 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 should instead retain them along with other payroll and income tax records.

For more information on how to benefit from the HIRE Act’s employment tax provisions, see Littler’s ASAP: HIRE Act Signed Into Law — What it Means to Employers Update – IRS Weighs in. Do you have shovel ready jobs? by GJ Stillson MacDonnell.

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IRS Provides Guidance on HIRE Act's Employer Tax Benefits, Issues Draft Affidavit Form

Posted on April 5, 2010 by Ilyse Schuman

The Internal Revenue Service (IRS) has set up a website to provide employers with guidance on the payroll tax exemption and business credit provisions of the newly-enacted Hiring Incentives to Restore Employment (HIRE) Act.  This Act, among other things, relieves certain employers from their obligation to match the OASDI (Social Security) portion (typically 6.2% on the first $106,800 of wages for the calendar year) of FICA tax for certain workers hired after February 3, 2010, and before January 1, 2011, who have been substantially unemployed for at least 60 days. The IRS has created a draft model affidavit (Form W-11) (pdf) for employees to certify their un- or underemployment status, although employers may use their own form. This tax holiday covers wages paid to these employees on or after March 19, 2010 and only through 2010, and does not apply to the FICA tax portion covering the Medicare Hospital Insurance contribution nor to other state and federal employer tax obligations. The HIRE Act also creates a similar tax holiday for employers covered by the Railway Retirement Act instead of FICA. A business (tax) credit of up to $1000 is available to certain employers in 2011, with respect to employees retained for at least 52 weeks.

While promoted as a measure to increase employment, the HIRE Act’s intricacies and mechanics will principally benefit employers that now have open positions available, and the ability to fill them quickly. Additionally, given that under certain circumstances the Work Opportunity Tax Credit (WOTC) may provide more generous benefits to employers than the HIRE Act’s tax holiday provisions, an employer will have the option—on an individual employee basis—to opt out of the HIRE Act where WOTC provides a better option.

For a comprehensive analysis of the HIRE Act’s provisions. including the IRS’s recent Q&As, see Littler’s ASAP: HIRE Act Signed Into Law — What it Means to Employers Update – IRS Weighs in. Do you have shovel ready jobs? by GJ Stillson MacDonnell.
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