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Senate Expected to Pass Jobs and Tax Bill

March 16, 2010

The Senate is expected to approve a jobs bill on Wednesday that provides tax breaks for companies that hire workers.

The Hiring Incentives to Restore Employment (HIRE) Act includes a payroll tax holiday for businesses that hire workers who have been unemployed for at least 60 days, and an income tax credit of $1,000 for businesses that retain employees for a year, along with income tax cuts to spur new investment by small businesses to help them expand and hire more workers.

The HIRE Act also extends the enhanced expensing provision in Section 179 of the Tax Code, allowing small business taxpayers to write off up to $250,000 of certain capital expenditures in 2010, instead of depreciating the costs over time.

The Senate voted Monday evening on a 61-30 margin to clear the last procedural hurdle, with six Republicans joining 53 Democrats and two independents, according to The New York Times. The Senate is expected to approve the bill on Wednesday, according to The Hill, allowing President Obama to sign the legislation.

Under the HIRE Act, employers would get an exemption on Social Security taxes for each employee they hire after Feb. 3, 2010 and prior to Jan. 1, 2011.

Ali Master, national director of business incentives and tax credit services with Ernst & Young, said in a Webcast on Tuesday that the timing would be tricky on some of the legislation’s requirements, with some wages counting only from the date of enactment of the legislation. “It’s really a short-term incentive to get more people hired,” he noted. “Congress wants people to avoid ‘churning,’ which is to fire somebody and then rehire them just to claim the tax credit. Also, relatives are not eligible.”

One hurdle may be that employees will need to fill out a “self-attestation form,” and Master predicts that not everybody is to going to fill out the form. Maybe 80 percent will do it, but that’s a guesstimate.

Another jobs and tax bill that the Senate passed last week, the American Workers, State and Business Relief Act, containing extended assistance for the unemployed and extenders for expired tax breaks, still needs to be reviewed in the House and may not be passed for several more weeks (see Senate Passes Tax Extenders and Unemployment Bill).

In the meantime, House Ways and Means Committee Chairman Sander Levin, D-Mich., introduced a bill on Tuesday to extend unemployment benefits through May 5 and the COBRA health insurance subsidy for the unemployed through April 30.

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