IRS Issues Revised Forms W-2 and W-3 for HIRE Act Changes

April 21, 2010

The IRS has issued revised Form W-2, Form W-3 and Instructions for Forms W-2 and W-3 to reflect changes made by the Hiring Incentives to Restore Employment (HIRE) Act. A new code for box 12 of Form W-2, Code CC, has been added for employers to report the amount of wages and tips covered by the payroll tax exemption under the HIRE Act. The total of Code CC is reported in new box 12b on Form W-3, and the total of deferred compensation amounts, previously reported in box 12, is now reported in new box 12a on Form W-3.

On March 18, 2010, President Obama signed the HIRE Act into law, providing tax incentives for businesses hiring unemployed workers, and extending hiring deduction limits for small businesses that make capital improvements. See HIRE Act Provides Tax Breaks for Hiring Unemployed Workers.

In addition to the revised Forms W-2 and W-3, the IRS previously issued a new Form W-11, “Hiring Incentives to Restore Employment (HIRE) Act Affidavit,” and has posted it to its website. The IRS also has posted HIRE Act frequently asked questions and answers for employers on its website. In addition to addressing general questions regarding the payroll tax exemption, the guidance addresses specific questions about which employees qualify and how to claim the payroll tax exemption.