IRS Payroll Tax Audit Initiative:
It Could Impact Your Executive Compensation and Nonqualified Deferred Compensation Plans…
Original Air Date:
November 24, 2009
9:00 AM – 10:00 AM PST
David R. Fuller from Morgan Lewis
William L. MacDonald from Retirement Capital Group
The Internal Revenue Service (IRS) has quietly unveiled its most significant audit initiative in decades – an initiative the IRS confirmed this month with little fanfare even though its expansive scope will target the federal tax returns of 6,000 companies. The primary audit goals include:
• Reducing the tax gap by increasing tax compliance and payroll tax collections and
• Reducing the number of “misclassified” independent contractors.
A likely secondary objective, and one urged by the Government Accountability Office (GAO), is to ensure benefits coverage and “labor protections” traditionally associated with employee status.
The IRS will apparently devote special attention to executive compensation such as loans, executive travel, nonqualified deferred compensation, retirement contracts, stock-based compensation, and golden parachutes (including whether the executives properly included the amounts in gross income). The first round of information document request (IDRs) also reveals that the IRS will audit Section 409A compliance.
Mr. Fuller will cover the process and answer the questions of what issues will be audit targets and how companies should prepare.
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