Federal HIRE Act Will Cut Payroll Costs for Summer Camps

by Allen McBride, AIC Treasurer

With the nation’s focus on the Health Insurance Reform controversies in Washington in recent weeks, a little noticed law that was passed a few days earlier could save your camp a significant amount of money in the summer of 2010.

On March 18th, President Obama signed the Hiring Incentives to Restore Employment Act into law. To quote information on the new law from the IRS website: “Employers who hire unemployed workers this year (after Feb. 3, 2010 and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010. This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.”http://www.irs.gov/newsroom/article/0,,id=220326,00.html

After consulting with a tax attorney, two CPAs, a payroll company and the IRS, the Association of Independent Camps has determined that in addition to previously unemployed adults who might work at camp for the summer, high school and college-age students who were not employed full-time prior to beginning work at camp would also qualify for this employer tax exemption.

A statement from the employee certifying that he or she has not been employed full-time in the 60 days preceding hiring will be required. You may download the HIRE Act Affidavit IRS Form W-11 here: http://www.irs.gov/pub/irs-pdf/fw11.pdf.

Please note that the employee portion of Social Security tax must still be withheld, but the camp will not be required to pay its share (6.2%) of the payroll tax. This will result in a direct cost savings to the camp of over $6,000 on a $100,000 payroll. With camper enrollments for 2010 being reported as soft or down nationwide, these cost savings might be even more important this summer than in years past.

Of course, you should check with your tax professional before making any decisions or filings based on the information in this article.

Allen McBride
AIC, Treasurer

Reprinted from the AIC March 2010 Newsletter, Inc Link.

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