Compliance October 14, 2003

IRS: Golden Parachute Tax Rules Change Effective in August

October 14, 2003 (PLANSPONSOR.com) - New rules imposing a 20% excise tax on golden parachute payments actually kicked in this summer, even though they won't fully go into effect until January 1, 2004, the Internal Revenue Service (IRS) announced.

Reported by

Fred Schneyer

>Clarifying the regulations first put out in August, IRS officials said employers can use an August 4, 2003 effective date even though the rules technically cover a golden parachute payment contingent on a change in corporate ownership or control on or after January 1, 2004, Dow Jones reported.

In addition to the date clarification, the IRS also made one technical change to a section of the rule dealing with cash transfers. The rest of the rule was not affected.

Golden parachute regulations are often triggered when company executives receive compensation packages as a result of a merger or acquisition.