Pending Payroll Bill Would Affect Employer Tax Payments

In late February, the Senate passed H.R. 2847, the Hiring Incentives to Restore Employment Act (HIRE Act) by a 70-28 vote. As of this writing, the bill had not yet become law, but was pending in the House of Representatives. If subsequently signed by the President and enacted, the HIRE Act would provide a tax break to employers who hire unemployed workers after February 3, 2010, through the end of 2010.

Specifically, under Section 101 of the HIRE Act, most U.S. employers would be exempt from paying their portion of Social Security taxes (6.2 percent) for newly hired employees, who are called “Qualified Individuals.” This special exemption would not be available to U.S and state governments, or any of their political subdivisions (e.g., city or county governments). However, the tax break would be available to public institutions of higher education (as defined in §101(b) of the Higher Education Act of 1965).

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