The IRS has released a number of updates over the past month including additional clarification on the HIRE Act and COBRA extension. It contains details on how to receive the credit for wages/tips paid to qualified employees after March 18th and before April 1st, 941 filing instructions and additional information on the COBRA premium assistance and extension.
Qualified employer’s social security tax credit. Qualified employers are allowed a credit in the second quarter of 2010 for their share (6.2%) of social security tax on wages/tips paid to their qualified employees after March 18, 2010 and before April 1, 2010. The credit will be taken on lines 12c through 12e on the 941 where the employer will enter the number of qualified employees for the period, the exempt wages/tips and compute the social security tax exemption for the period of March 19-31, 2010. This amount will be treated as a deposit of taxes on April 1, 2010 and must not be used to adjust line 17 (Tax Liability for Quarter) or Schedule B (Report of Tax Liability for Semiweekly Schedule Depositors).
Qualified employer’s social security tax exemption. Qualified employers are allowed an exemption for their share (6.2%) of social security tax on wages/tips paid to qualified employees after March 31, 2010 and before January 1, 2011. The exemption is taken on lines 6a through 6d on the 941 where the employer will enter the number of qualified employees first paid exempt wages/tips in the quarter, the total number of qualified employees paid exempt wages/tips in the quarter, the exempt wages/tips paid during the quarter, and the social security tax exemption. The tax exemption listed on line 6d will directly impact the total taxes before adjustments listed on line 6e of the 941 return.
Payroll Control Systems (PCS) has been following the updates from the IRS closely with regard to the HIRE Act. We have the systems and procedures in place to assist our customers with receiving this credit. If you are not a PCS customer and would like further assistance, please call 763.513.5951 or email us at firstname.lastname@example.org. If you are a current customer and have further questions, please contact your Client Account Manager directly. To access our prior releases on the HIRE Act which include a wizard for determining new hire eligibility and the W-11 form the employee must sign, click here.
COBRA premium assistance credit extended. The credit for COBRA premium assistance payments has been extended. It now applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months. Congress may take additional legislative action that extends the credit further. Stay tuned for further updates from PCS or you can monitor the progress at the IRS website, enter keyword COBRA.
Legal Disclaimer: This article is intended for informational purposes only and by no means should replace or substitute other legal documents (governmental or non-governmental) reflecting similar content or advice. If you have any questions concerning your situation or the information provided, please consult with an attorney or an HR Professional.