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HIRE Act Update: IRS Issues "Employee Affidavit Form" To Support Tax Incentives

April 7, 2010

Today the IRS issued a form affidavit (Form W-11) for completion by qualified, newly-hired employees in order to confirm their employers' eligibility for tax incentives under the Hiring Incentives to Restore Employment (HIRE) Act. Each qualified employee must certify his or her qualified status on Form W-11 or a similar affidavit in order for the employer to claim a HIRE Act tax incentive. To view the new Form W-11, click here.

The HIRE Act was enacted March 18, 2010 to encourage employers to hire unemployed workers. The Act provides tax incentives to eligible employers who, between February 3, 2010 and January 1, 2011, hire qualified workers that were previously unemployed. The Act applies to virtually all private employers (except household employers) and also to public colleges and universities. For additional information on the HIRE Act's tax incentives, see Varnum's April 2, 2010 advisory, Federal HIRE Act Extends Tax Benefits To Employers.

Covered employers who wish to participate in HIRE Act tax incentives should have any newly-hired employee who meets all of the following criteria complete and sign Form W-11:

  • The employee was or is hired between February 3, 2010 and January 1, 2011;
  • The employee was not employed for more than 40 hours during the 60-day period prior to the date of hire;
  • The employee was not hired to replace another employee unless that other employee "separated from employment voluntarily or for cause;" and
  • The employee is not related to the employer under Internal Revenue Code rules.

The completed Form W-11 should not be submitted to the government, but must instead be maintained by the employer along with its other payroll and income tax records.

The IRS has published Questions and Answers for Employers concerning the HIRE Act, which sets forth responses to frequently asked questions, draft forms, and press releases. Additional guidance and forms are expected in the near future. In the meantime, if you have any questions about Form W-11 or the Act in general, please contact Stephanie Setterington, Jeff Gray or any other member of Varnum's Labor and Employment Practice Team.

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