The IRS has delivered a holiday “present” to employers and tax professionals: new guidance on reporting and withholding requirements for deferred compensation plans. (IRS Notice 2006-100)
Alert: The new guidance — which the feds had been holding until confusion abated over the revised deferred-comp rules in Sec. 490A, enacted as part of the American Jobs Creation Act of 2004 — lifts the suspension on reporting 2005 amounts imposed by Notice 2005-94, issued last year. It also sets reporting and withholding requirements for deferred-compensation amounts taxable in 2006.
On the plus side, deferred-comp payments that comply with Section 409A are exempt from the new reporting requirements.
Notice 2006-100 relieves employers from having to report annual deferrals of compensation that are not taxable on Form W-2 for employees or Form 1099-MISC for independent contractors for either the 2005 or 2006 tax years.
But they must report taxable amounts for both 2005 and 2006 on Form 941 (Employer’s Quarterly Federal Tax return) by the deadline for the 2006 tax year: Jan. 31, 2007.
Employers don’t have to report amounts that that they’d previously included in taxable income for 2005.
Tip: The new notice also provides guidance for calculating amounts included in gross income under Sec. 409A. For the complete notice, visit www.irs.gov/pub/irs-drop/n-06-100.pdf.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/7019/irs-issues-new-guidance-on-deferred-comp-arrangements "