This is part 1 of a 12 part series courtesy of your regional Paychex representative, Rob Tiernan. This series identifies a dozen significant regulatory topics of importance to small businesses in 2012. Some of these issues will lead to legislative changes and others to simple rule modifications. Regardless of the level of government attention they receive, these initiatives could require employers to make significant adjustments to the way they manage their businesses. If you have any questions or comments please follow up with Rob by email at: rtiernan@paychex.com
1. Job Creation
President Obama will continue working with Congress in 2012 to jump-start hiring. While the American Jobs Act of 2011 wasn’t passed in the same form in which it was proposed, Congress did pass legislation to provide tax credits for hiring veterans and relief for the long-term unemployed. The Vow to Hire Heroes Act of 2011 (http://www.irs.gov/publications/p15/ar01.html) was signed into law on November 21, 2011.1 Businesses can claim a tax credit of from $5,600 to $9,600 for hiring veterans who have been looking for work for at least six months and a credit of $2,400 for hiring those who have been looking for at least four weeks.
With the passage of the Middle Class Tax Relief and Job Creation Act of 2012 (http://www.irs.gov/newsroom/article/0,,id=254723,00.html), Congress extended the Employee Social Security tax cut for all of 2012.2 Under the terms of this law, the social security tax withholding rate remains at 4.2 percent of wages paid through December 31, 2012. As part of the legislation, the recapture provision, passed with the original legislation in December, was repealed. In addition, the legislation reduces the number of weeks an individual may receive unemployment benefits from 99 weeks to 73 weeks for those living in states with an unemployment rate higher than the 8.3% national average. For those in states with an unemployment rate under the national average, the number of weeks an individual may receive unemployment benefits will be reduced to as low as 40 weeks. The legislation also includes a provision that allows states to drug-test unemployment beneficiaries, as well as a provision to prevent reductions in Medicare reimbursements for doctors.