Wiki: HIRE Act (2010)

Hiring Incentive to Restore Employment Act (HIRE)#

The following document outlines the set up requirements in Personality to handle the new ‘HIRE’ law that was enacted by the US Federal Government effective March 18th, 2010.

The following is an excerpt taken from the website: http://www.irs.gov/newsroom/article/0,,id=220326,00.html

Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.

Overview#

Qualified employers will have the employer portion of the FICA tax reduced for the 2010 calendar period, if they have met the required guidelines. In order to ensure implementation of this feature without installing a new software release, this will be handled through pay components, pay elements, a user-defined field and a User Calc.

Employees must provide evidence that they were not employed OR worked less than 40 hours during the 60 day period prior to their date of hire. Receipt of this evidence will be stored via a user-defined field and will trigger the User Calc to execute. The User Calc will determine if the employee qualifies and if so, will reduce the Employer’s portion of the FICA tax accordingly. Refer to the section ‘FICA ER Contribution Reduction Set up Requirements’ for instructions outlining the steps required in Personality. The User Calc will be called before the standard Legislative routine and reduce the FICA Employer Taxable wages.

FICA Incentive Set Up Requirements#

1. In the IMUF screen, create a user-defined field on the P2K_HR_EMPLOYMENTS table named FICA_INCENTIVE with a prompt FICA Incentive Statement as a Char field, linked to the lexicon X_YES_NO. This UDF will be used to identify that the employee provided the required evidence for eligibility and will be the trigger for the User Calc.

2. In the IPPE screen, create an element called ‘FICA INC WAGES’ and list all wage pay components that are to be exempt from the employer portion of FICA. Note: ** If you are currently using only one element to store FICA EE/ER and MEDI EE/ER wages, these will need to be separated. A separate element must be defined for the FICA ER WAGES as this is the element that will be affected for FICA ER taxes.

3. In the IPPC screen, create a pay component (e.g. PC 9000- FICA Incentive Wages; Usage = 9999) to store the value from the element FICA INC WAGES.

4. Place this pay component 'FICA Incentive Wages $' into the element used for FICA ER GROSS (Operator = Subtract).

5. In the IMVR Screen, create new constant values for the User Calc we will be defining:

FICA_INC_EXPIRE	Date	01-Jan-2011
FICA_HIRE_START	Date	03-Feb-2010
FICA_HIRE_END	Date	01-Jan-2011

6. In the IMUC screen create a Payroll User Calc. The User Calc will:

: a. Determine if the employee qualifies based on the value in the user-defined field and when they were hired

: b. Determine if the current pay issue date is past the FICA Incentive Expiration Date (01-Jan-2011)

: c. Store the FICA Incentive Wages into a pay component (e.g. PC 9000)

7. In the IMUC screen create a Payroll UserCalc to cap Pay Component amount for FICA Incentive Wages. The UserCalc will:

: a. Determine if the pay component for FICA Incentive Wages is greater than the Pay Component for the FICA Employee Earnings

: b. If yes, store the FICA Employee Earnings (e.g. PC 6202) pay component amount into the pay component for the for FICA Incentive Wages (e.g. PC 9000)

Variables#

FICA Incentive Wages NUMBER

Lines#

Line	CMD	Type1	Operand1	OPER	Type2	Operand2	If Goto	Else
5	IF	DB	PPP.PAY_ISSUE_DATE	GE	$C	FICA_INC_EXPIRE	99999	10
10	IF	DB	EEM.FICA_INCENTIVE (UDF)	EQ	A	Y-Yes	20	99999
20	IF	DB	EEM.HIRE_DATE	GE	$C	FICA_HIRE_START	30	99999
30	IF	DB	EEM.HIRE_DATE	LE	$C	FICA_HIRE_END	100	99999
100	LET	V	FICA Incentive Wages	EQ	EC	FICA INC WAGES	105
105	LET	PC	9000	EQ	V	FICA Incentive Wages	99999
99999	EXIT

Special Notes#

The value in PC 9000 will be subtracted from the FICA ER GROSS element
The first line of the UserCalc checks to see if the current pay issue date is after the FICA Incentive Expiration Date (01-Jan-2011); If so, the UserCalc must exit.
The FICA Wages Reduced $ is calculated as follows:
FICA Wages Reduced $ = FICA ER WAGES (element) – FICA INCENTIVE (element)
The UserCalc must be placed on the pay point set before taxes are calculated (e.g. Pay Point Type = 50 More Ben/Dedns)
The UserCalc for capping the FICA Incentive Wages must be placed on the pay point set after taxes are calculated (e.g. Pay Point Type = 70 After Gov Calc)
For the 941 report;
a. Add the FICA taxable wages for the EE, ER and the FICA Incentive Wages and use the total for box 5a.
b. For box 6c you would report just the FICA Incentive Wages.

Calculation Examples #

Example 1
Earnings subject to FICA	$1,000
Dollar amount not eligible for incentive Note: although not specified in the legislation provisions are made to allow for this.	$ 50
Pre FICA Employer taxable wages	$1,050
FICA incentive wages	$1,000
FICA taxable wages	$50
FICA employer tax (calculated by Vertex)	$3.10
Example 2
Earning subject to FICA	$1,000
Pre FICA Employer taxable wages	$1,000
FICA incentive wages	$1,000
FICA taxable wages	$ 0
FICA employer tax (calculated by Vertex)	$ 0

Retro Adjustments#

Due to the legislation being implemented retro to March 18, 2010 there are some considerations for retro and quarterly tax filing that are unknown at this time.

The payrolls for employees that may qualify for the incentive have been processed. If there are employees identified that qualify retro-actively, a year-to-date adjustment may be required. Depending on the final IRS quarterly reporting decision, the year-to-date adjustment may be in quarter 1 or quarter 2.