Last week, President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act (HR 2847). The law includes several major tax provisions designed to promote job creation as the nation’s economy continues to recover from recession.
The Act introduces the “Hire Now Tax Cut” to qualified employers both in the form of payroll forgiveness for Social Security taxes paid for qualified new hires, as well as a tax credit for keeping those employees on payroll for 52 consecutive weeks.
The Act also extends enhanced Code Sec. 179 expensing threshold levels through December 31, 2010. This extension means that the previous limits of $125,000 with a $500,000 cap will remain increased to $250,000 with an $800,000 cap through the end of the calendar year. Code Sec. 179 expensing, unlike bonus depreciation, is available on both new and used property.
In addition, the HIRE Act alters Build America Bonds, originally part of the American Recovery and Reinvestment Act of 2009 (ARRA), slightly to increase consumer interest. Subsidies will now be available through both a refundable tax credit and a direct payment equal to the amount of that credit.
The HIRE Act also contains provisions designed to offset the full cost of the tax incentives. These provisions include a delayed implementation of the worldwide allocation of interest rules as well as several measures to increase offshore tax compliance.
Look for more details in the months ahead about how these and other provisions of the HIRE Act may provide you and your business with considerable opportunities to maximize tax savings, or contact your local CB&H tax professional today to ensure that you and your business receive the maximum possible benefit of these provisions.
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