Social Security Legislative Bulletin

Number: 111- 37
Date: March 18, 2010

On March 17, 2010, the Senate passed H.R. 2847, the “Hiring Incentives to Restore Employment (HIRE) Act” by a vote of 68-29. The House passed this legislation on March 4, 2010 as described in Legislative Bulletin 111-36 . The bill now awaits the President's signature to become law.

Payroll Tax Forgiveness for Hiring Unemployed Workers

•  Would exempt “qualified employers” from paying the employer share of OASDI tax on wages paid to certain “qualified individuals” hired and employed after February 3, 2010 and before January 1, 2011. 

•  A “qualified employer” would not include any Federal, State, or local government entity, but would include public institutions of higher learning. A qualified employer would also include railroad employers.1

•  A “qualified individual” would be an individual hired and employed for the time frame previously described who had not worked for more than 40 hours during the 60-day period before such employment began. 

•  Would be effective with respect to wages paid for employment after the date of enactment and before January 1, 2011.

•  Would provide a special rule for payroll taxes exempted for wages paid for employment after enactment and before April 1, 2010; the amount of such exempted taxes would be applied as a credit against payroll taxes due for the second calendar quarter.

•  Would not affect the amount of Social Security covered earnings of any individual.

•  Would appropriate monies payable from the Treasury to the OASI and DI Trust Funds equal to the tax amounts not paid by qualified employers under the bill. The amounts would be transferred from the General Fund in such manner as to replicate, to the extent possible, the transfers which would have occurred to such Trust Funds had such amendments not been enacted.

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1 Rather than exempting the full tier 1 payroll tax on railroad retirement employers, such employers would pay a reduced tier 1 tax equal to 1.45 percent of earnings (the hospital insurance tax rate).

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