And the company will continue help customers identify eligible employees.
But informing customers in this case is much more a process than an event as regulations come forward and the Internal Revenue Service translates the law's requirements into the impact on taxation. So payroll services have put together Web sites to offer the ability to keep up with the process. This includes Automatic Data Processing, which offers www.ADP.com/JobTaxCredit, and Paychex, which has www.paychex.com/hireact.
And from the horse's mouth, the Internal Revenue Service offers an article with questions and answers about the Hire Act for employers. It can be found at http://www.irs.gov/businesses/small/article/0,,id=220745,00.html
A key provision is that the act eliminates the 6.2 percent Social Security tax for eligible new hires. For the employer to receive this benefit, new employees must certify their previous employment status by signed affidavit. Companies can also take in income tax credit of $1,000 per qualifying worker once the worker is employed for at least 52 consecutive weeks, or 6.2 percent of wages received by the worker over the same period, is less.
Paychex has found no much interest in the act that its Webinars, which hold up to 500 participants, have filled up in minutes of the opening of registration. And in one of them, the company fielded 315 questions, which are being utilized to develop a frequently asked question section for a Web page.
The IRS has done a lot of work, such as revising the W-2. But there are "lots of specific items they haven’t produced guidance on, such as independent contractors," says Neil Rohrer, Paychex's director of marketing. "They [the IRS] are mulling over with their counsel."
Major questions include whether employers must provide any proof of the employee's eligibility and if that information needs to be filed with the IRS. For employers, it's sufficient to have the employee attest to eligibility and to file that with other payroll records.
"The responsibility all comes down to the employee," says Michelle Konzel, a Paychex marketing manager.
Employers also want to know how they receive the credit, which includes filing quarterly via each 981 reducing the payroll tax each quarter. Companies like ADP are providing that adjustment and are only too happy to state that this makes payroll even more complicated for the do-it-your-selfers
ADP's information pages include the Hire Calculator through which the employer enters the month of the new hire and the employee's annual salary and the calculator spits out the tax credit and total savings for that employee. The company also adapted its payroll system to eliminate the employer-paid portion of FICA tax for those employees. And it offers Tax Credit Services for companies that want to outsource the work to meet the administrative and compliance requirements of the Hire Act.
Ceridian, another payroll service, offers the Estimator, which utilizes information from five fields to provide several detailed tax saving breakdowns for the 2010 Social Security Tax Exemption for Hiring, and the 2011 Business Tax Credit for 52-Week Retention. The PDF-based calculator is available athttp://www.ceridian.com/corp_nav/1,6267,16640,00.html. Ceridian bills its Estimator as offering much more detail than other calculators.
And like the other payroll services, Ceridian is also incorporating changes into its system. These enabling employers to identify qualified employees in the payroll system and accumulate wages eligible for the employer Social Security tax exemption. Beginning this quarter, Ceridian also provides underlying calculations and reporting to support changes in form 941. It will report required information on W-2s, as do the other services.