New HIRE Act Compliance will Yield Significant Tax Savings for Your Organization

The new Hiring Initiatives to Restore Employment (HIRE) Act signed into law by President Obama on March 18th, 2010, will mean significant savings through tax credits for qualifying organizations.  The program is designed to offer an incentive to organizations who hire new employees who have not worked more than forty hours within the sixty days prior to employment.  Essentially, employers will be able to save the usual company-matching 6.2% on the first $106,800 in wages paid to qualified new hires.  This could mean tens or hundreds of thousands of dollars in savings for qualifying organizations.

Qualified employees will be required to fill out and sign a Form W-11 (available at http:/www.irs.gov/pub/irs-pdf/fw11.pdf) attesting to the fact that they meet the eligibility criteria.  Employers must submit the form to the federal government and then report earnings subject to the tax credit.  It is expected that digital signatures and transmissions will be accepted when guidance is announced in the near future.

Digital Designs is offering document and meta data management support as a subscriber-based option in the DocAgent Enterprise Document Management Suite to make compliance easier for our clients.  

Qualifying employees will be able to fill out W-11 forms online, print them and sign them and submit them to their employer.  Scanning support with intelligent data extraction will store essential information as meta data associated with the digital image of the signed W-11 form.  Meta data can be exported on-demand from the secure document repository for tax analysis and for import into financial accounting, payroll and human resources software applications.  

DocAgent will manage the digital copies of the W-11 documents over their prescribed lifetimes.  An audit trail of document touch points will be available to auditors, and DocAgent will enable on-demand retrieval of requested documents by authorized individuals.

The incentive applies to new hires employed between February 3, 2010 and December 31, 2010.  There is a second level incentive if those employees are retained for more than fifty-two weeks after their original hire date.  There are also considerations for organizations applying for tax credit incentives under the existing the Work Opportunity Tax Credit (WOTC).  You can elect one or the other, but WOTC eligibility extends for an entire year, so toward the end of 2010 it may be an advantage to elect WOTC over HIRE.

The HIRE Act is the first of several job bills likely to be adopted by congress this year.  Please contact Digital Designs at 1-800-948-6293 to learn more about the HIRE act and how we can help make your compliance easier and more manageable.

| John Queen