Thursday, January 28, 2010

BNA Webinar Provides Some Clarity on Notice 2010-6

Guidance provides reasonable solutions as to how to fix plan document problems, and possibly avoid or limit tax penalties. However, rules are complex and even more guidance will be needed to outline the correction procedures. Mr. Tackney indicated a revenue procedure may be issued down the road.

BNA - Groom Law Release HERE

Monday, January 25, 2010

Exec Comp Audits to leave "No Stone Unturned"

6,000 audits will be "deeper" and "more intensive" than typical audits - Article HERE

"The 6,000 exams, to be conducted over three years, will be deeper than typical audits and look at fringe benefits such as executive use of corporate jets, company cars and other reimbursements arrangements, Arcidiacono said.

"The examiners have been instructed to leave no stone unturned," he said on a recent call with clients.

The IRS has not taken a systematic focus on employment issues in decades, according to tax lawyers. The agency will examine a cross section of companies by size and industry.

"We've had quite a few clients who have had more intensive employment tax and executive compensation audits," in recent months, said Anne Batter, an attorney at Miller Chevalier who previously worked in the IRS chief counsel office, which interprets the tax code."

Friday, January 22, 2010

Webinar on 409A Audits and Enforcement

I wanted to share this information regarding a BNA webinar relating to the IRS' audit activities on January 28, 2010.


"The IRS is signaling more §409A enforcement. The agency's recent audit activity and document requests requiring comprehensive disclosures about plans and individuals subject to §409A confirm this trend. Plan document and operational errors should be identified and corrected to avoid heavy tax penalties.

Our panel of experts from the IRS and a leading law firm will analyze new IRS guidance on correcting §409A plan document failures and will discuss opportunities and potential pitfalls under the guidance. The panel will identify commonly occurring hazards -- including ambiguous plan terms and impermissible definitions and payment events, to name just a few -- and will offer practical solutions to help you avoid costly and damaging results.

Program highlights include:

• Identifying opportunities to correct certain document failures with limited or no income inclusion or additional taxes
• Reviewing the scope of this relief based on whether the correction affects plan operation within one year of the correction
• Analyzing common document correction scenarios and any related operational correction requirements
• Highlighting clarifications in the new guidance that certain common plan provisions do not result in document failures
• Noting clarifications to the operational correction program in the new guidance
• Discussing any alternatives to the operational and document correction programs

The objectives of this Webinar include providing participants with an understanding of the IRS’s new correction program for certain types of failures of nonqualified deferred compensation plans to comply with §409A. Upon completion of the program, participants will be able to:

• Describe the correction program guidance
• Understand how the new program fits with earlier IRS guidance on plan corrections
• Identify commonly occurring §409A failures to comply
• Understand the risks associated with §409A noncompliance and the possible opportunities created by the IRS guidance
• Apply correction principles to client plans"

Tuesday, January 12, 2010

409A Case Law Arrives (Slater vs. IRS)

This is the first case that I am aware of. Please use to comments to cite any other cases, or to comments on the case.

Link to Slater vs. IRS HERE

Thursday, January 7, 2010

More on Corrections under IRS Notice 2010-6

Experts believe companies may "tweak" documents. Guidance seems to "give a pass" on non-technical language.

Article from Financial Advisor quotes Drigotas and Hogans - HERE

A brief summary by Liza Hecht of Nukk-Freeman & Cerra HERE

"What Should Employers Do?

Given the opportunity to avoid accelerated taxes for the affected participant, as well as the IRS' stated intent to increase audit activity in this area, employers should review any and all agreements that could be considered deferred compensation under Code §409A. If any document failures are uncovered the employer should make any and all corrections before December 31, 2010."

IRS Issues Guidance on 409A Corrections - Notice 2010-6

IRS Notice 2010-6 Here

"This notice provides methods for taxpayers to voluntarily correct many types of failures to comply with the document requirements applicable under § 409A of the Internal Revenue Code (Code) to nonqualified deferred compensation plans and thereby avoid or reduce the current income inclusion and additional taxes under § 409A. This document correction program is intended to encourage taxpayers to review nonqualified deferred compensation plans to identify provisions that fail to comply with the requirements of § 409A and § 1.409A-1(c) of the Income Tax Regulations (a document failure), and to correct those plan provisions promptly, while also not providing an advantage to taxpayers participating in plans that initially fail to comply with § 409A over taxpayers participating in plans drafted in compliance with § 409A."