The HIRE Act (Hiring Incentives to Restore Employment), enacted March 18, 2010, is a plan to create jobs by providing a temporary tax break to companies that hire workers who were previously unemployed or worked part time. Two new tax benefits are available to employers:
- The payroll tax exemption. The first benefit provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees. This benefit would be effective for wages paid from March 19, 2010 through December 31, 2010.
- The new hire retention credit. Businesses will also be eligible for a general business tax credit of 6.2 percent of wages paid to the qualified employee (employee must be retained for at least a year), up to a maximum credit of $1,000.
Visit the IRS website for more detailed information and check with your tax adviser on whether the new HIRE act applies to your company.
Section 9006 of the 2010 Patient Protection and Affordable Care Act (aka ObamaCare) mandates that after December 31, 2011 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year. Chris Edwards of The Cato Institute published an insightful article entitled Costly IRS Mandate Slipped Into Health Bill about the new regulations.
The bottom line could be that this change may radically alter the nature of 1099 filing and require businesses to issue millions of 1099 documents each year. The two key changes are:
- 1099′s would be used to track payments not only for services but also for tangible goods.
- Businesses would be required to issue 1099′s not only to individuals and partnerships but also to corporations. This list could include items such as a new computer purchase from Apple, airline tickets for next year’s conference, monthly office rent and phone bills. Almost every vendor for every business would become a 1099 vendor.
The full impact of this new regulation won’t be known until the IRS issues its regulations. That will probably happen sometime next year. We will continue to update this blog as more details are made public.
The Cato Institute was founded in 1977 by Edward H. Crane, and is a highly-respected non-profit public policy research foundation headquartered in Washington, D.C. For more information, visit www.cato.org.
Sage is holding their annual partner conference, Insights, in Denver, CO in May. Becky Krause, Director of Human Resources for Sage, and I are presenting a session at the conference entitled ROWE for Small Businesses: Why Work Sucks and How to Fix It (GEN24) on Wednesday, May 19th at 8:00am.
Although this conference is only available to Sage partners, I will be posting a recording of our recent Results-Only Work Environment (ROWE) webinar to this blog. Everyone is invited to view that recording.
Becky has invited the Sage partners who have registered for this session to comment on this article to encourage the sharing of ideas, opinions and questions about ROWE. Our goal is to make the session a collaborative one and to make sure we cover the topics of the most interest to the group. Here is the abstract from the Insights website:
Learn why works sucks for you and your employees and how to fix it. Just ROWE! Creating a Results-Only Work Environment frees your workforce from traditional corporate shackles to focus on and deliver strong business results. Attend this session to learn how to transform your culture from one that measures contribution by the number of hours worked to one that measures performance by the business results achieved. Do you know ROWE? Attend this session to understand why the ROI for your business cannot be ignored.
Since this session is an interactive one, we are encouraging dialog about why and how ROWE is the future for all knowledge workers. We will also talk about the concept that knowledge workers are volunteers. Meaning that all of us “employ” volunteers.
In order to prepare for this session, we recommend that you read Why Work Sucks and How to Fix It by Cali Ressler and Jody Thompson. If you would like to learn more about the concept of the knowledge worker, we recommend that you read The Firm of The Future by Ron Baker. And attend Ed Kless’Insights sessions on Wednesday, May 19th from 1:30pm to 5:30pm (GEN52)
Please let us know what your thoughts, ideas and opinions about ROWE. And if there are some other topics you would like to talk about, please feel free to let us know in the comments section.
