Wednesday, March 10, 2010

More on 409A Corrections - Cracking the Code

Presentation from Ivins, Phillips & Barker to DC Bar Tax Section on making corrections OUTSIDE of IRS Formal Programs: "409 Failures: Correcting Outside of the IRS's Formal Correction Programs" HERE

Flashback: Is it permitted to correct 409A failures outside of formal IRS programs? Lawyers say "yes." See Rosina B. Barker & Kevin P. O’Brien (both of Ivins, Phillips & Barker, Washington, D.C.) have published 409A Failures: Correcting With and Without Notice 2008-113, 124 Tax Notes 557 (Aug. 10, 2009).

"We suspect these will be legion. The IRS might not think that correction outside the notice is permitted. If this is their view, we do not agree. The IRS’s narrow view appears based on the notice’s underlying and, we believe, mistaken theory of § 409A. We set forth a better view of § 409A, one more consistent with the statute and regulations, and based on traditional concepts of income receipt. On the basis of this preferred view, we explore how § 409A operational failures might be corrected using rescission doctrine, the longstanding rule of Couch v. Commissioner, and other theories of income receipt derived from the case law. The difference between these two opposing theories of § 409A will underlie this and no doubt other disputes about § 409A compliance and administration for years to come."

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