World Class Mergers & Acquisitions  |  For Companies $5 Million to $100 Million in Revenue

Mergers & Acquisition FAQ – August 2010

Q: Recently I have heard that Congress and the Obama Administration have enacted a law (known as the HIRE Act) encouraging employers to hire unemployed workers.  How does this new law work?

A: Employers hiring unemployed workers between Feb. 3, 2010, and before Jan. 1, 2011) generally qualify for a 6.2 percent payroll tax discount (on the employer’s end). The employee’s share must still be paid.  The 6.2 percent share of Social Security tax and the employer and employee’s shares of Medicare tax still apply to all wages.

Q: In addition to the HIRE Act, the Business Retention Credit has been enacted as well.  Can you tell me about it?

A: The HIRE retention credit is claimed on the employer’s income tax return for qualified employees, hired under the HIRE act for 52 consecutive weeks. Per definition, “The amount of the credit is the lesser of $1000 or 6.2 percent of wages (as defined for income tax withholding purposes) paid by the employer to the retained qualified employee during the 52 consecutive week period.”

Q: I have hired employees under the intention of utilizing the HIRE Act.  If the employee takes unpaid sick leave, or vacation pay during the consecutive 52 weeks, does such employer-employee relationship still fall within the intent and usage of the HIRE Act?

A: Each case is fact specific; however, if the employee is retained for 52 weeks AND the total compensation for the last 26 weeks is equal to or greater than 80% of the first 26 weeks, said employee will still qualify for treatment.

By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors