As we all know, one of the most devastating problems currently facing the American economy is the significant unemployment rate. Recently, as part of its effort to reduce such rate, Congress enacted the Hiring Incentives to Restore Employment (HIRE) Act, which, among other effects, provides incentives to businesses that hire qualifying, previously unemployed workers.

Such unemployed workers are "qualified" if they were unemployed during the 60 days before beginning work with the new employer, or, alternatively, worked less than a total of 40 hours for someone else during such 60 day period. To determine whether new employees meet the criteria set forth in the HIRE Act as outlined above, employers must receive certified statements from new eligible employees.

The HIRE Act achieves this purpose in two ways: first, it reduces the amount of payroll taxes employers must pay on behalf of workers who were previously unemployed. Generally, in addition to amounts that must be withheld from employees' wages, businesses must remit to the IRS an amount equal to 7.65% of wages paid to employees (6.2% of wages for Social Security Taxes and 1.45% of wages for Medicare Taxes). Under the HIRE Act, employers will be exempt from paying to the IRS the 6.2% Social Security Tax Portion on wages paid to qualifying employees.

In addition to this reduction in Employment Taxes, for each qualifying worker employed for at least one year, employers will be entitled to a credit against their 2010 Federal Income Taxes of up to $1,000.

Whether you are a business looking to hire new employees while saving some taxes, or an unemployed individual looking to convince an employer that hiring you is in their best interest, the HIRE Act could be of significant assistance to you.