FEBRUARY 2011

HIRE ACT – RELIEF FROM MISSED OPPORTUNITY

FOR PAYROLL TAX INCENTIVES

It has come to our attention that many businesses were not adequately informed about the payroll tax incentives under the Hiring
Incentives to Restore Employment (“HIRE”) Act. The HIRE Act was signed into law on March 18, 2010. The Act provides payroll tax
breaks and incentives for businesses to hire unemployed workers.

Payroll Tax Holiday

Employers are eligible for a payroll tax credit when the employer hires qualified new employees after February 3, 2010 and before
January 1, 2011. Qualified employees must have either been unemployed for at least 60 days prior to hire or worked fewer than 40
hours for another employer during the same 60 day period. Employers do not pay the employer portion of the Social Security tax,
which is 6.2-percent, on wages paid to eligible new hires.

Qualified employees must certify by a signed affidavit, under penalties of perjury, that they have not been employed for more than
40 hours during the 60-day period ending on the date they started employment. The IRS issued Form W-11 Hiring Incentives to
Restore Employment (HIRE) Act Employee Affidavit, which confirms that an employee is a qualified employee under the Act. Employ-
ers are not required to use Form W-11 and may opt to use their own statement, as long as the statement contains the information
found on the actual Form. Form W-11, or similar statement, need not be filed with the IRS, but must be retained by the employer
with their payroll and income tax records. However, an employer may only claim the payroll tax exemption when the employee signs
an affidavit such as Form W-11.

Relief from Failure to Timely Claim Payroll Tax Exemption

Generally, the payroll tax exemption is claimed on Form 941 Employer’s Quarterly Federal Tax Return, beginning with the second
quarter of 2010. The exemption may only be taken on wages actually paid to a qualified employee from March 19, 2010 through
December 31, 2010.

However, if the employer fails to claim the exemption on any of its quarterly payroll tax returns, the credit is not lost. As long as the
requirements to claim the credit, as discussed above, are satisfied, an employer may File Form 941-X Adjusted Employer’s Quarterly
Federal Tax Return or Claim for Refund, for each quarter that the employer is claiming the credit.

There is still time to claim benefits under the HIRE Act’s payroll tax holiday. Please reach out to your clients and make sure they
have taken advantage of this one-time opportunity. If you or your client know they qualify under the HIRE Act, but have not taken
advantage of the program, please feel free to call me to discuss how we can assist them.
 FEBRUARY 2011
As always, please call if you would like to discuss any of these items further.

Your Tax Partners,

Mark G. Cook, Partner Richard A. Linder, Partner Jon Widdowson, Partner

Steven J. Cupingood, Partner David Neighbors, Partner Michael Wu, Partner
John A. Eckweiler, Partner Todd Northrup, Partner Don Leve, Partner
Dan B. Faulk, Partner Javier Ramirez, Partner
Andrew L. Gantman, Partner Thomas E. Wendler, Partner

IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in
this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties
under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matters addressed herein.
Notice: Opinions, conclusions, and other information in this message are not intended to represent recommendations or advice to you or any
other person. Each person’s circumstances are unique, and we strongly suggest you discuss your specific situation with your professional advisor
before taking any action based on the information herein or information to which this message refers.