As Clark County struggles with a high jobless rate, leaders in Washington state government are urging companies to hire laid-off workers under a new federal program that offers employers tax credits worth thousands of dollars.
Passed by Congress in March, the federal Hiring Incentives to Restore Employment Act makes two new tax benefits available to employers who hire certain previously unemployed workers: a Social Security tax exemption and a new-hire retention credit.
But few companies have heard of the tax benefits, partly because the IRS hasn’t widely advertised the program, said Sheryl Hutchison, communications director for the state Employment Security Department. That’s why state leaders are making a push to spread the news, including releasing statements last week from Gov. Chris Gregoire touting the new program as “a great way for employers to save some money as they rebuild their work force.”
One company that has not only heard of the program but is already using it is Vancouver-based Gulick Freight Service Logistics, a trucking company with more than 30 years of experience, including transporting a variety of commodities.
Rhonda Boni-Burden, operations manager for Gulick, said her company recently hired an unemployed worker under the program, giving a job and training to someone who needed it while positioning the company to reap tax benefits.
“It allows people to continue to grow their business in a bad economy,” Boni-Burden said. “Every little bit counts, definitely.”
Under the program, an employer’s 6.2 percent share of Social Security tax is waived through the end of this year for wages paid to an eligible new hire. The exemption is claimed on an employer’s quarterly federal tax return. The second tax benefit works this way: For each qualified employee retained for at least 52 consecutive weeks, businesses can claim a new-hire retention credit of up to $1,000 on their 2011 income tax return.
Boni-Burden said the tax benefits are a “cost benefit” for her company. And Gulick is considering hiring another worker under the program, she added.
Qualified employees are those who: begin employment with a qualified employer after Feb. 3 and before Jan. 1, 2011; have been unemployed or employed for less than 40 hours total during the continuous 60-day period immediately before the employment begins; and are not family members or related in certain other ways to the employer.
A qualifying employee does not have to work full-time, and there is no minimum number of work hours required. Qualified employees must sign an affidavit stating that they have been employed for less than 40 hours during the 60 days before starting their new job. The IRS has posted a model affidavit online, http://www.irs.ustreas.gov/pub/irs-pdf/fw11.pdf. Employers keep the signed affidavits. Employers do not have to contact an employment office or other government agency to verify a job candidate’s affidavit.
Hutchison said most employers qualify for the tax benefits. Federal, state or local government employers — except for public colleges and universities — do not. Neither do household employers.
The Employment Security Department’s WorkSource centers are available to help employers screen and recruit eligible unemployed workers. Addresses and phone numbers for WorkSource offices can be found online at http://www.Go2WorkSource.com.
The HIRE Act isn’t the only program offering tax benefits to employers who hire laid-off workers. The Work Opportunity Tax Credit is available for employers that hire people who need the most help finding work. These include the disabled, ex-felons, food stamp recipients, people on welfare, recipients of Supplemental Security Income, unemployed veterans, and unemployed youths aged 16 to 24 who are not in school and need training to get a job.