Corporate Finance Law Blog : Corporate Finance Lawyer & Attorney : Davis Wright Tremaine Law Firm

"SUMMARY: This document contains proposed regulations on the calculation of amounts includible in income under section 409A(a) and the additional taxes imposed by such section with respect to service providers participating in certain nonqualified deferred compensation plans. The regulations would affect such service providers and the service recipients for whom the service providers provide services. This document also provides a notice of public hearing on these proposed regulations."

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Senator Kerry and Representative Emanuel have introduced legislation titled the "Offshore Deferred Compensation Reform Act of 2007."  They have provided a summary of the proposed legislation (accessible through http://taxprof.typepad.com/), and you can also view Senator Kerry's press release.

The legislation would create a new Section 457A of the Internal Revenue Code that would eliminate the ability of U.S. taxpayers to defer nonqualified deferred compensation in offshore tax havens.  Offshore nonqualified deferred compensation paid by foreign corporations would be taxable income when there was no substantial risk of forfeiture.

The legislation itself was not yet available when we posted this entry.  When it is available, you will be able to find it at this link.

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Yesterday, September 10, 2007, the Treasury Department and the IRS announced that taxpayers will have until December 31, 2008, to bring their documents into compliance with the final regulations under Section 409A of the Internal Revenue Code.  Previously the deadline was December 31, 2007.  In Notice 2007-78, the Treasury and IRS also announced that they anticipate issuing guidance containing a limited voluntary compliance program that will permit the correction of certain unintentional, operational violations of Section 409A.  IRS Notice 2007-78 does not, however, extend the January 1, 2008, effective date of the final regulations.  We previously blogged about 92 large law firms requesting this exact relief.  Final Section 409A regulations were issued in April of this year.  

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On April 11, 2007, the IRS issued the final Section 409A regulations.

The IRS issued preliminary guidance on Section 409A in Notice 2005-1 on January 10, 2005.  The final regulations for the most part supersede Notice 2005-1, but in some respect the final regulations refer you back to Notice 2005-1.

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