Payroll tax forgiveness for hiring unemployed workers

(a)

In general

Section 3111 is amended by adding at the end the following new subsection:

(d)

Special exemption for certain individuals hired in 2010

(1)

In general

Subsection (a) shall not apply to wages paid by a qualified employer with respect to employment during the period beginning on the day after the date of the enactment of this subsection and ending on December 31, 2010, of any qualified individual for services performed— (A)in a trade or business of such qualified employer, or (B)in the case of a qualified employer exempt from tax under section 501(a), in furtherance of the activities related to the purpose or function constituting the basis of the employer’s exemption under section 501. (2)

Qualified employer

For purposes of this subsection— (A)

In general

The term qualified employer means any employer other than the United States, any State, or any political subdivision thereof, or any instrumentality of the foregoing. (B)

Treatment of employees of post-secondary educational institutions

Notwithstanding subparagraph (A), the term qualified employer includes any employer which is a public institution of higher education (as defined in section 101(b) of the Higher Education Act of 1965). (3)

Qualified individual

For purposes of this subsection, the term qualified individual means any individual who— (A)begins employment with a qualified employer after February 3, 2010, and before January 1, 2011, (B)certifies by signed affidavit, under penalties of perjury, that such individual has not been employed for more than 40 hours during the 60-day period ending on the date such individual begins such employment, (C)is not employed by the qualified employer to replace another employee of such employer unless such other employee separated from employment voluntarily or for cause, and (D)is not an individual described in section 51(i)(1) (applied by substituting qualified employer for taxpayer each place it appears). (4)

Election

A qualified employer may elect to have this subsection not apply. Such election shall be made in such manner as the Secretary may require.

(b)

Coordination with work opportunity credit

Section 51(c) is amended by adding at the end the following new paragraph:

(5)

Coordination with payroll tax forgiveness

The term wages shall not include any amount paid or incurred to a qualified individual (as defined in section 3111(d)(3)) during the 1-year period beginning on the hiring date of such individual by a qualified employer (as defined in section 3111(d)) unless such qualified employer makes an election not to have section 3111(d) apply.

(c)

Transfers to Federal Old-Age and Survivors Insurance Trust Fund

There are hereby appropriated to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401) amounts equal to the reduction in revenues to the Treasury by reason of the amendments made by subsection (a). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund had such amendments not been enacted. (d)

Effective date

The amendments made by this section shall apply to wages paid after the date of the enactment of this Act.

Business credit for retention of certain newly hired individuals in 2010

(a)

In general

In the case of any taxable year ending after the date of the enactment of this Act, the current year business credit determined under section 38(b) of the Internal Revenue Code of 1986 for such taxable year shall be increased by an amount equal to the product of— (1)$1,000, and (2)the number of retained workers with respect to which subsection (b)(2) is first satisfied during such taxable year. (b)

Limitation

The increase determined under subsection (a) with respect to any retained worker shall not exceed an amount equal to 4 percent of the wages (as defined in section 3401(a) of the Internal Revenue Code of 1986) with respect to such retained worker for the 52 consecutive week period described in subsection (c)(2). (c)

Retained worker

For purposes of this section, the term retained worker means any qualified individual (as defined in section 3111(d)(3) of the Internal Revenue Code of 1986)— (1)who was employed by the taxpayer on any date during the taxable year, (2)who was so employed by the taxpayer for a period of not less than 52 consecutive weeks, and (3)whose wages for such employment during the last 26 weeks of such period equaled at least 80 percent of such wages for the first 26 weeks of such period. (d)

Limitation on carrybacks

No portion of the unused business credit under section 38 of the Internal Revenue Code of 1986 for any taxable year which is attributable to the increase in the current year business credit under this section may be carried to a taxable year beginning before the date of the enactment of this section.