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On January 11, 2018, the IRS issued Notice 1036, which provides the percentage method tables for income tax withholding in 2018. Key developments include: The flat withholding rate on supplemental wages, such as equity awards, of $1 million dollars and under a year is now 22% – down from 25%. As anticipated, the mandatory supplemental withholding rate for compensation in excess of $1 million is now 37% – down from 39.6%. The backup withholding rate…

The IRS has issued guidance in Notice 2017-46 (the “Notice”) relaxing the rules applicable to U.S. financial institutions that require the collection of foreign taxpayer identification numbers (Foreign TINs) from U.S. nonresident aliens. Under anticipated amendments to temporary regulations that are described in the Notice, withholding agents will be required to collect a Foreign TIN and date of birth (in the case of an individual account holder) on a foreign person’s beneficial owner withholding certificate (e.g., a…

The IRS, DOL and PBGC recently provided various forms of relief intended to help employees and employers impacted by Hurricanes Harvey and Hurricane Irma.  In this second blog post we review funding and reporting relief and take a brief look at Vacation/PTO donation programs. To read our first post on loans and hardship distributions from qualified plans, click here. Defined-Benefit Plan Funding Relief IRS Notice 2017-49 provides single defined-benefit plan sponsors or employers covering more…

The IRS, DOL and PBGC recently provided various forms of relief intended to help employees and employers impacted by Hurricanes Harvey and Hurricane Irma.  Due to the extent of the relief provided we are covering this information in two blog posts – the first of which will focus on loans and hardship distributions from qualified plans and the second of which will look at the various reporting and funding extensions available. Plan Loans and Hardship…

As most employers are aware, the obligation to report non-qualified deferred compensation (NQDC) that complies with Internal Revenue Code (IRC) Section 409A is currently suspended, but non-compliant NQDC is required to be reported in Box 12 of an employee’s Form W-2. Employers should also be aware of the additional Form W-2 reporting requirements that may apply to NQDC, including equity awards that are considered NQDC, such as deferred restricted stock units: the obligation to report…

On April 21, 2017, the Trump Administration issued Executive Order 13789, which instructed the IRS to review all “significant tax regulations” issued on or after January 1, 2016 to identify as targets for modification, rescission or delayed effectiveness any regulations that (i) impose an undue financial burden on U.S. taxpayers; (ii) add undue complexity to the Federal tax laws; or (iii) exceed the statutory authority of the IRS. Having completed this review, earlier this month,…

The IRS recently issued guidance in Rev. Proc. 2017-28 addressing special rules that apply when employers seek a refund of FICA (social security and Medicare) taxes.  This new guidance serves as a reminder to employers that special processes should be followed when seeking a refund of FICA taxes. Background As background, recall that FICA taxes are imposed on both the employer and the employee — half is paid directly by the employer and the other…