Newsletter
Newsletter
03.31.10
We are pleased to bring you Perspectives, an update of trends, articles, and advisories relating to U.S. and international compensation, employee benefit and employment matters. We will also respond to questions of general interest on these topics. Companies are facing significant internal and external challenges in the current economic environment. Human resources professionals, as well as legal counsel supporting the HR function, must deliver services in a manner that meets the short- and long-term objectives of companies and at the same time provides cost effective and timely support. Perspectives is meant to assist you in this challenging landscape.
We welcome your input and suggestions and look forward to bringing you up-to-date and timely pieces in our future issues of Perspectives.
Susan P. Serota, National Leader, Executive Compensation & Benefits Practice
QUESTIONS FROM OUR READERS...
Q. I heard the IRS has launched an employment tax compliance study and will be conducting tax audits of approximately 6,000 companies. What will be the focus for these audits and what can companies do now to minimize exposure in the event of an audit?
A. In September 2009, the IRS announced plans to audit approximately 6,000 companies over the next three years as part of the Employment Tax National Research Program (the “NRP”). The IRS will randomly select 2,000 companies a year for the next three years for these audits and expects to send out the first audit notices by the end of February 2010. Key areas of focus for the NRP audits include: worker classification, fringe benefits, executive compensation and payroll taxes.
All employers should review current employee-related plans and practices now to find any compliance issues and implement internal correction procedures. A comprehensive review of worker classifications, fringe benefit policies and payroll tax practices may mitigate future risks and penalties in these areas, in the event of an IRS audit. Employers should also review all nonqualified deferred compensation plans and arrangements for compliance with Internal Revenue Code section 409A. These 409A reviews should assess operational as well as documentary compliance. IRS corrections programs—including a recently-announced document corrections program—may be available if employers take such a proactive approach and find compliance issues in their nonqualified deferred compensation plans. This NRP is likely to be just the beginning of an IRS focus on employment-related tax issues for years to come. Now is the time for employers to be proactive and review their employee-related plans and practices.
Download: Perspectives: An Executive Compensation, Benefits & HR Law Update