PAYROLL TAX FORGIVENESS FOR HIRING UNEMPLOYED WORKERS.

SEC. 101. PAYROLL TAX FORGIVENESS FOR HIRING UNEMPLOYED WORKERS.(a) In General.—Section 3111 is amended by adding at the end the following new subsection:124 STAT. 73 “(d) Special Exemption for Certain Individuals Hired in 2010.—“(1) In general.—Subsection (a) shall not apply to wages paid by a qualified employer with respect to employment during the period beginning on the day after the date of the enactment of this subsection and ending on December 31, 2010, of any qualified individual for services performed—“(A) in a trade or business of such qualified employer, or“(B) in the case of a qualified employer exempt from tax under section 501(a), in furtherance of the activities related to the purpose or function constituting the basis of the employer’s exemption under section 501.“(2) Qualified employer.—For purposes of this subsection—“(A) In general.—The term ‘qualified employer’ means any employer other than the United States, any State, or any political subdivision thereof, or any instrumentality of the foregoing.“(B) Treatment of employees of post-secondary educational institutions.—Notwithstanding subparagraph (A), the term ‘qualified employer’ includes any employer which is a public institution of higher education (as defined in section 101(b) of the Higher Education Act of 1965).“(3) Qualified individual.—For purposes of this subsection, the term ‘qualified individual’ means any individual who—“(A) begins employment with a qualified employer after February 3, 2010, and before January 1, 2011,“(B) certifies by signed affidavit, under penalties of perjury, that such individual has not been employed for more than 40 hours during the 60-day period ending on the date such individual begins such employment,“(C) is not employed by the qualified employer to replace another employee of such employer unless such other employee separated from employment voluntarily or for cause, and“(D) is not an individual described in section 51(i)(1) (applied by substituting ‘qualified employer’ for ‘taxpayer’ each place it appears).“(4) Election.—A qualified employer may elect to have this subsection not apply. Such election shall be made in such manner as the Secretary may require.“(5) Special rule for first calendar quarter of 2010.—“(A) Nonapplication of exemption during first quarter.—Paragraph (1) shall not apply with respect to wages paid during the first calendar quarter of 2010.“(B) Crediting of first quarter exemption during second quarter.—The amount by which the tax imposed under subsection (a) would (but for subparagraph (A)) have been reduced with respect to wages paid by a qualified employer during the first calendar quarter of 2010 shall be treated as a payment against the tax imposed under subsection (a) with respect to the qualified employer for the second calendar quarter of 2010 which is made on the date that such tax is due.”.124 STAT. 74(b) Coordination With Work Opportunity Credit.—Section 51(c) is amended by adding at the end the following new paragraph:“(5) Coordination with payroll tax forgiveness.—The term ‘wages’ shall not include any amount paid or incurred to a qualified individual (as defined in section 3111(d)(3)) during the 1-year period beginning on the hiring date of such individual by a qualified employer (as defined in section 3111(d)) unless such qualified employer makes an election not to have section 3111(d) apply.”.(c) Transfers to Federal Old-Age and Survivors Insurance Trust Fund.—There are hereby appropriated to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund established under section 201 of the Social Security Act (42 U.S.C. 401) amounts equal to the reduction in revenues to the Treasury by reason of the amendments made by subsection (a). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Trust Fund had such amendments not been enacted.(d) Application to Railroad Retirement Taxes.—(1) In general.—Section 3221 of the Internal Revenue Code of 1986 is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:“(c) Special Rate for Certain Individuals Hired in 2010.—“(1) In general.—In the case of compensation paid by a qualified employer during the period beginning on the day after the date of the enactment of this subsection and ending on December 31, 2010, with respect to having a qualified individual in the employer’s employ for services rendered to such qualified employer, the applicable percentage under subsection (a) shall be equal to the rate of tax in effect under section 3111(b) for the calendar year.“(2) Qualified employer.—The term ‘qualified employer’ means any employer other than the United States, any State, or any political subdivision thereof, or any instrumentality of the foregoing.“(3) Qualified individual.—For purposes of this subsection, the term ‘qualified individual’ means any individual who—“(A) begins employment with a qualified employer after February 3, 2010, and before January 1, 2011,“(B) certifies by signed affidavit, under penalties of perjury, that such individual has not been employed for more than 40 hours during the 60-day period ending on the date such individual begins such employment,“(C) is not employed by the qualified employer to replace another employee of such employer unless such other employee separated from employment voluntarily or for cause, and“(D) is not an individual described in section 51(i)(1) (applied by substituting ‘qualified employer’ for ‘taxpayer’ each place it appears).“(4) Election.—A qualified employer may elect to have this subsection not apply. Such election shall be made in such manner as the Secretary may require.124 STAT. 75“(5) Special rule for first calendar quarter of 2010.—“(A) Nonapplication of exemption during first quarter.—Paragraph (1) shall not apply with respect to compensation paid during the first calendar quarter of 2010.“(B) Crediting of first quarter exemption during second quarter.—The amount by which the tax imposed under subsection (a) would (but for subparagraph (A)) have been reduced with respect to compensation paid by a qualified employer during the first calendar quarter of 2010 shall be treated as a payment against the tax imposed under subsection (a) with respect to the qualified employer for the second calendar quarter of 2010 which is made on the date that such tax is due.”.(2) Transfers to social security equivalent benefit account.—There are hereby appropriated to the Social Security Equivalent Benefit Account established under section 15A(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 231n–1(a)) amounts equal to the reduction in revenues to the Treasury by reason of the amendments made by paragraph (1). Amounts appropriated by the preceding sentence shall be transferred from the general fund at such times and in such manner as to replicate to the extent possible the transfers which would have occurred to such Account had such amendments not been enacted.(e) Effective Dates.—(1) In general.—Except as provided in paragraph (2), the amendments made by this subsection shall apply to wages paid after the date of the enactment of this Act.(2) Railroad retirement taxes.—The amendments made by subsection (d) shall apply to compensation paid after the date of the enactment of this Act.