>The Internal Revenue Service (IRS) said in a news release that of the 124 executives initially targeted for possible settlement as part of the agency’s crackdown on the abusive stock option transactions, 10 were determined not to have participated in the abusive transaction (See IRS: Settlement Window for Stock Scam Open until late May ).
>Of the remaining 114, 80 executives decided to participate while 15 other executives reached agreement through the audit process. Nineteen individuals did not elect to participate. Those who declined to participate in the settlement offer are either under audit or had other pending criminal tax investigations, the IRS said.
>Those executives who elected to participate or otherwise resolved their tax liability have $500 million in potential income adjustments. The IRS estimates that the 19 executives who did not participate in the settlement offer underreported their income by more than $400 million.
>By transferring stock options to family controlled
partnerships, the IRS charged that executives tried to
defer tax on stock option income for up to 30 years. The
settlement required executives to include 100% of their
stock option compensation in income, pay applicable
interest, income and employment taxes and pay a 10%
“When we announced this initiative in February, we wanted to give corporations and executives a chance to turn the page and make things right,” said IRS Commissioner Mark Everson. “The vast majority of those involved chose to come forward under the settlement’s tough terms. The response reflects higher standards for corporate governance and less tolerance for abusive tax transactions.”
>The IRS also released the latest figures on its Son of Boss settlement offer, a 2004 initiative to resolve another abusive tax shelter transaction. To date more than 1,200 electing taxpayers have qualified to participate in this offer. The taxes, interest and penalties collected from this group has now topped $3.7 billion.
>More about the stock option settlement program is here .