Monday, December 29, 2008

NFL - 409A Update

NFL - 409A Update from National Football Post - "Language Has Been Vetted by NFLPA and NFL Management Council"

"There was a bit of activity on the contract front last week when the Cowboys formalized a deal with tackle Marc Colombo for four years and $22M, with about half guaranteed. The deal was being held up by the 409a tax code issue, which I discussed earlier. There is now language that has been vetted by the NFLPA and the NFL Management Council that allows teams to amend contracts as needed so the player does not suffer tax consequences on deferred bonus money, which virtually all bonus money is."

Article Also Discusses Dallas Cowboys Recent Free Agent Signings and Potential Salary Cap Issues

Dallas Cowboy Performance 12/28 Here.

409A Urban Myths from Feld

Silicon Valley Mythbuster - Here

"Perhaps the only upside to the 409A panic in the start up world has been some of the urban legends that have already popped up. Jason and I aren’t your lawyers, so don’t take this as formal advice, but if your lawyers are advising you of the following, at least ask some questions. We’ve personally heard some senior partners at big-name law firms say some crazy things regarding 409A. The following are actual quotes. We will not disclose names to protect the innocent, er.. guilty."

Wednesday, December 24, 2008

Companies Busy with Year End 409A Amendments - Sample 8-Ks

Palm, Inc.

Grubb & Ellis Company

3M Company

Pep Boys

Loral Space and Communications

American Eagle Outfitters

The Timberland Company

Chuchill Downs

Cray Inc.

Sysco Corporation

Abercrombie & Fitch

Additional 409A Thoughts For Sports Agents

From Connecticut Sports Law Blog

"A signing bonus is compensation earned by joining a team, but it is frequently paid out over time. For example, let’s say that Jim is an in-demand pitcher. On January 1, 2009 he signs with a team that offers him a $10 million signing bonus to be paid over a five year contract term. Without making sure that the bonus fits within an exception in the 409A regulations, Jim would be receiving non-qualified deferred compensation subject to 409A. That means that Jim would have to pay taxes on $10 million of income in 2009 and be subject to a 20% excise tax on top of that. The result? Jim is only paid the $2 million due for the first year’s payment, and already owes the IRS $2 million in excise tax plus income taxes of approximately $3 million."

Monday, December 15, 2008

NFL Player Agents Warned of 409A Peril

Players Association Sends Urgent Memo

"The NFLPA was clear about the importance of this provision in its memo to all agents: “This memorandum identifies an extremely important tax issue that may affect your player-clients and requires your immediate attention. The NFL has just informed the NFLPA that NFL clubs did not draft or amend many NFL player contracts in order to bring them into compliance with Section 409A of the Internal Revenue Code. As a result, many player contracts that include certain deferred compensation arrangements may not comply with the new tax provisions, thereby resulting in accelerated taxable income and/or an additional 20% tax, imposed on the player-client, unless the contracts are amended on or before December 31, 2008.”"

XtremERISA Blog Discusses 409A and 457A - - Forms the "A" Team

From XtremERISA Blog

Wednesday, December 10, 2008

IRS Provides Guidance on Withholding under 409A

IRS Notice Here

"This notice provides interim guidance to employers and payers on their reporting
and wage withholding requirements with respect to amounts includible in gross income
under §409A of the Internal Revenue Code. This notice also provides interim guidance
to employers and payers on their reporting requirements with respect to all deferrals of compensation under §409A of the Internal Revenue Code. This notice does not affect the application of §3121(v)(2) or an employer’s reporting obligations under §31.3121(v)(2)-1 of the Employment Tax Regulations. In addition, this notice provides guidance to service providers on their income tax reporting and tax payment requirements with respect to amounts includible in gross income under §409A."

Sunday, December 7, 2008

IRS Issues Final 409A(a) Relief Procedures

From PlanAdvisor: IRS Issues Final 409A(a) Relief Procedures

The IRS Notice Here

"According to the IRS notice, the new procedures include:

Methods for correcting certain operational failures during the service provider's taxable year in which the failure occurs and, for certain service providers also during the subsequent taxable year, to avoid income inclusion under § 409A(a).

Relief limiting the amount includible in income under § 409A(a) for certain operational failures during a service provider's taxable year that involve only limited amounts.

Relief limiting the amount includible in income under § 409A(a) for certain operational failures regardless of whether the failure involves only limited amounts, but subject to further required actions to correct the failure.
Special transition relief for certain operational failures occurring before January 1, 2008."