On January 14, 2025, the Internal Revenue Service (âIRSâ) published proposed regulations (the âProposed Regulationsâ) under Section 162(m) of the Internal Revenue Code (âCodeâ), which generally limits publicly held companies to a $1 million annual tax deduction for compensation paid to âcovered employeesâ in a taxable year. The Proposed Regulations implement amendments made to Code Section 162(m) by the American Rescue Plan Act of 2021 (the âARPAâ) to expand the definition of âcovered employeeâ to…
On November 7, 2024, for the first time, the Internal Revenue Service (IRS) has made available a form on which elections under Section 83(b) of the Internal Revenue Code may be made. This new Form 15620 provides a standardized method for elections and should streamline the process of making an 83(b) election. However, the new form is not required to be used, and taxpayers may continue to use their own form of election, provided it…
Earlier this year, the Internal Revenue Service (“IRS”) announced it would be using advanced analytic techniques and additional funding to audit tax compliance by businesses when their business aircraft are used for personal reasons by executives. The IRS’s Large Business and International Division also added a “Business Aircraft Campaign” to its list of compliance campaigns. This focus by the IRS appears to have triggered calls for it to revisit the manner in which personal use…
On April 12, 2024, Treasury and the IRS published proposed regulations on the 1% excise tax imposed by Internal Revenue Code Section 4501 on the value of stock repurchased by a US public corporation or a 50% affiliate. The proposed regulations elaborate on and clarify compensation-related issues that arose in Notice 2023-2, December 27, 2022 (addressed in our prior blog post), including: For a full discussion of these topics and practical tips on next steps, we…
The Internal Revenue Service has issued welcome guidance related to the COBRA subsidy provisions under the American Rescue Plan Act (“ARPA”) in the form of IRS Notice 2021-31 (the “Notice”). As background, for the period from April 1, 2021, through September 30, 2021, ARPA requires employers to provide a 100% COBRA premium subsidy (the “COBRA Subsidy”) for “assistance eligible individuals” (an “Eligible Individual”). In general, an Eligible Individual is anyone who elects COBRA continuation coverage…
In an apparent follow-up to its General Legal Advice Memorandum dated May 18, 2020 (GLAM 2020-004), the IRS has issued an internal procedural update that (1) extends the application of the administrative waiver of late employment tax deposit penalties for stock options to stock-settled restricted stock units (âRSUsâ) and stock appreciation rights (âSARsâ) and (2) shortens the waiverâs deposit period by one day to align with current SEC securities open-market transaction settlement rules. The internal…
For an update on this development, see our July 15, 2020 post here. The IRS has issued a General Legal Advice Memorandum (GLAM 2020-004) that could increase the audit risk and exposure for late deposit penalties for companies granting stock-settled restricted stock units (âRSUsâ) and either (i) not making their next-day employment tax withholding deposits with the IRS within one day of when they request their transfer agent to transfer shares underlying the RSU award…
Now that we have had a couple of weeks to digest the IRSâs guidance in Notice 2018-68 on the Tax Cuts and Jobs Actâs (TCJAâs) amendments to Code Section 162(m), itâs a good time to take a closer look at the âgrandfatheringâ rule. As a reminder, the TCJA (i) eliminated the âperformance-based compensationâ exception to Section 162(m)âs $1 million limit on the deductibility of covered employee compensation, (ii) expanded and made permanent the group of…
In a Private Letter Ruling released on August 17, 2018 (PLR 201833012) (âRulingâ), the IRS approved an employerâs proposed amendment to its 401(k) plan (âPlanâ), under which it would make an employer non-elective contribution on behalf of an employee conditioned on the employee making student loan repayments (âSLR non-elective contributionâ). As described in the Ruling, the proposed student loan repayment benefit program (the âprogramâ), is a voluntary program under which the employee must elect to…
Last week, the IRS issued Notice 2018-68 containing initial guidance on the amendments to section 162(m) made by the Tax Cuts and Jobs Act (âTCJAâ), including the transitional relief for written binding contracts. On balance, the guidance is not particularly favorable to taxpayers, as it takes a narrow view of the grandfathering relief for arrangements in effect under prior law, particularly for arrangements with negative discretion, and a broad view of the new group of…