By Greg Daugherty and Dave Tumen on Public company nonqualified plans and incentive plans may need to be amended to avoid a potential violation of Internal Revenue Code (IRC) Section 409A as a result of changes to IRC Section 162(m) under the Tax Cuts and Jobs Act. This amendment most likely is required for employers that mandated deferrals of amounts that exceeded … Continue Reading
By Guest Blogger and Porter Wright on Many thanks to our summer clerk, Ryan Graham, for his significant contribution to this blog. A farmer was having a tough time understanding why his chickens were producing less eggs than in previous years. He wrote a letter to the local university, asking for guidance on increasing his chickens’ egg production. The university handed the … Continue Reading
By Porter Wright on If you are a board member or senior executive of a company that is rapidly failing, what do you about employee benefits? No one has ever liked my answer: freeze the benefits. This is counterintuitive advice for someone who is trying to keep the company afloat, and who would be personally affected by the loss of benefits. But let me explain why this is so important, using a complaint that was recently filed by the DOL, and the facts as they were alleged.… Continue Reading
By Greg Daugherty on Are you able to accrue and deduct annual bonuses for a 2013 calendar year performance period in 2013, so long as you pay the bonuses to your employees by March 15, 2014? If this question sounds familiar, it is because we have blogged about past efforts of the IRS to address this issue. Historically, most employers believed that the answer was they could deduct the bonuses in the year accrued rather than the year paid, but during the past few years, the IRS has chipped away at that belief. In a recent Chief Counsel Advice Memorandum, the IRS issued its most sweeping guidance to date on the issue.… Continue Reading
By Porter Wright on It is hard to believe that nearly five months have passed since the United States Supreme Court issued its landmark decision in United States v. Windsor. As a reminder, the Supreme Court held that the provisions contained in the Defense of Marriage Act (“DOMA”) that exclude same-sex relationships from the definition of marriage and spouse for federal law purposes (i.e., Section 3 of DOMA) are unconstitutional. The broad impact of this holding is clear: for purposes of federal law (e.g., ERISA, the Internal Revenue Code, etc.), same-sex marriages must be treated the same as opposite-sex marriages. But, while the general effect is clear, the Supreme Court’s decision left many questions unanswered. … Continue Reading
By Greg Daugherty on Because of the pending fiscal cliff and the possibility of higher tax rates coming in 2013, we have been asked if private company employers should accelerate payments of incentive compensation into 2012, rather than pay them in 2013. This strategy may sound tempting to executives given all of the headlines of the fiscal cliff and potentially higher tax rates on high-wage earners. Still, a lot can happen between now and December 31st. … Continue Reading
By Greg Daugherty on The IRS recently issued an important ruling on whether dividends and dividend equivalents related to restricted stock and restricted stock units (“RSUs”) can be treated as performance-based compensation for purposes of Code Section 162(m).… Continue Reading
By Porter Wright on In a recent blog, we discussed the need for employers with non-calendar year health FSAs to act now to implement the new $2,500 FSA limits imposed under health care reform. Thankfully, recent IRS guidance eliminates these concerns.… Continue Reading
By Porter Wright on Beginning January 1, 2013, the Patient Protection and Affordable Care Act ("PPACA") requires plan sponsors to limit pre-tax health flexible spending account ("FSA") contributions to no more than $2,500 per calendar year. There are currently no limits on health FSA contributions. This change is anticipated to be a revenue-raiser, because the new limit is lower than most existing plan-imposed pre-tax FSA contribution limits, and affected employees will pay taxes on more of their salary. … Continue Reading
By Porter Wright on Yesterday’s action in the United States Senate would restore parity under federal tax law treatment for fringe benefits designed to encourage the use of public transportation by employees. Under Section 132(f) of the Internal Revenue Code (the “Code”), employer-provided qualified transportation fringe benefits (“QTFs”) that do not exceed specified monthly excludable limits are exempt from … Continue Reading
By Porter Wright on On our sister blog - Employer Law Report - Leigh Anne Benedic discusses important considerations for employers who are considering hiring unpaid summer interns.… Continue Reading
By Greg Daugherty on Are you able to accrue and deduct annual bonuses for a 2011 performance period in 2011, despite the fact that an employee is required to be employed through the payment date in 2012 in order to receive the bonus? A few years ago, the IRS issued guidance that strongly suggested the answer was no, the deduction could not be taken in 2011.… Continue Reading
By Porter Wright on In a recent blog, we discussed a case that challenges the constitutionality of the Defense of Marriage Act ("DOMA"), which defines marriage for federal law purposes as a legal union between a man and a woman. DOMA was enacted during the administration of President Bill Clinton. Presuming DOMA is deemed constitutional by the courts and is not repealed by Congress (a possibility that appears remote at this point in time), employers theoretically could comply with federal employee benefits laws contained in ERISA by adopting (or maintaining) the DOMA definition of spouse. … Continue Reading
By Porter Wright on In an attempt up clear up confusion about the tax treatment of employer–provided cell phones, the Internal Revenue Service (the "IRS") has issued Notice 2011‐72. The Notice was issued on September 14, 2011, and the tax exclusion rules described below are effective for all cell phone usage after December 31, 2009. This new guidance likely will be appreciated both for the resulting clarity (or at least increased clarity) and for the position taken by the IRS. Note that the guidance in the Notice is limited expressly to cell phones.… Continue Reading