Apr 13, 2023

1 ©20

10 L

arso

nA

llen

LLP

Tax Legislation UpdateHIRE Act

Florida Surety Association

May 11, 2010

Jill Kling, ManagerLarsonAllen Construction and Real Estate Group

2

HIRE Act

• Hiring Incentives to Restore Employment Act of 2010

• Signed into law on March 18, 2010

• Objective: To help stimulate the hiring of workers by the private sector

3

Major Provisions of the Act

• Payroll Tax Holiday for hiring Unemployed Workers

• Tax Credit for Retaining Workers

• One-year extension of the small business expensing under Section 179

4

Payroll Tax Holiday

• FICA imposes two taxes– OASDI (Old Age Survivors Disability Tax)

◊ 6.2% Tax Rate on wages up to $106,800

– HI (Medicare Hospital Insurance)◊ 1.45% Tax Rate on all wages

• Payroll Tax Holiday– Provides relief for the employer share of OASDI taxes– Wages paid from March 19, 2010 through December

31, 2010 to qualified individuals– Maximum tax forgiven = $6,621 per employee

5

Eligibility for Payroll Tax Holiday

• Qualified Employer

– Any employer other than the federal or state government

– Includes non-profit organizations

– Note: Does not effect the self employment tax paid by self employed individuals

6

Eligibility for Payroll Tax Holiday

• Qualified individual is anyone who:– Begins employment after Feb 3, 2010 and before Jan

1, 2011– Certifies by signed affidavit that they have not been

employed for more than 40 hours during the 60-day period ending on the date the individual begins employment

– Does not replace another employee unless:◊ Employee left voluntarily◊ Employee left for cause

– Can not be related to the employer

7

Tax Credit for Retaining Workers

• Up to $1,000 Tax Credit for retaining qualified workers

• Qualified workers include:– An employee of the taxpayer who has worked 52

consecutive weeks; AND

– Whose wages for the last 26 weeks of employment equaled at least 80% of the wages for the first 26 weeks

8

Tax Credit Example

ABC Corp hires Earl on February 15, 2010. The 52-week work requirement is satisfied in the 2011 year if Earl works for ABC until February 14, 2011. Earl’s wages for the 52-week consecutive period are $30,000. ABC will be able to claim a $1,000 credit for Earl on their 2011 tax return.

• Note: the credit is the maximum of $1,000 or 6.2% of the wages paid during the 52-week period

9

Small Business Expensing Extended

• Increased Section 179 election available through 2011

• Up to $250,000 in qualified purchases may be expensed– Amount was $134,000 before HIRE legislation

enacted

• Ability to expense assets are reduced once purchases exceed $800,000

Apr 13, 2023

10 ©20

10 L

arso

nA

llen

LLP

Accounting Standards UpdateFlorida Surety Association

May 11, 2010

John Reed, PrincipalLarsonAllen Construction and Real Estate Group

11

Financial Statement Changes

• New Standards in Effect for 2009 Year End Financial Statements

• New Standards in Effect for 2010 Financial Statements

• Potential Upcoming Changes

12

New Standards in Effect for 2009 Year End Financial Statements

• FASB Codification Structure Replaces GAAP Hierarchy July 1, 2009 (Topics, Subtopics, Sections, Paragraphs)

• Codification Topic 740 (FIN 48) Income Tax Uncertainties

• Codification Topic 855 Subsequent Events– Type 1 Recognized Subsequent Events – Type 2 Nonrecognized Subsequent Events– Disclosure of consideration of when statements were

issued or were available to be issued

• Codification Topic 820-10 (SFAS 157) Fair Value Measurements – Updated Disclosures

13

Sample Income Tax Uncertainties Adoption Sample Note

14

Subsequent Event Consideration Sample Note

15

Fair Value Measurements Example

16

New Standards in Effect for 2010 Year End Financial Statements

• Codification Topic Consolidation of Variable Interest Entities (VIEs) (FAS 166/FIN 46(R))– Standards now based on control of entity. Fewer

VIEs need to be consolidated compared to prior standards

• Statements on Standards for Accounting and Review Services (SSARS) Number 19– Accountant can now explain why they aren’t

independent in a compilation engagement– Reviews can not be performed if not independent

17

Potential New Accounting Pronouncements to Watch For

• New Lease Accounting Rules – Operating lease assets and liabilities would be booked and treated the same as capital leases

• Ongoing movement to converge Generally Accepted Accounting Principles (GAAP) with International Financial Reporting Standards (IFRS)– Effect on revenue recognition of long-term contracts

• Big GAAP / Little GAAP