The New York Law Journal reports the law firms who wrote Acting IRS Commissioner Kevin Brown said the deadline did not give their clients enough time to adequately review their many deferred compensation agreements. The final regulations issued in April call for an effective date of January 1, 2008 (See IRS Issues Final Regulations for NQDC Plans ).
“If even we’re having problems with it, you can imagine how hard it is for everyone else,” said Regina Olshan, a partner at Skadden, Arps, Slate, Meagher & Flom who signed the letter to the IRS on behalf of the 92 law firms, according to The New York Law Journal. The letter stated that the deadline was imposing an “undue strain” on both companies and their advisers, including lawyers and accountants, and asked that the deadline be extended until December 31, 2008.
Olshan said the rules included almost 400 pages of new and “intricate” requirements.
The regulations address tax treatment of compensation workers earn in one year that is not paid until a future year. Recently, the IRS issued clarification on 409A’s effect on teacher compensation, stating s chool districts that choose to offer teachers an election to spread 2007 school-year pay over 12 months need not make any changes prior to 2008 and their employees will not be subject to additional taxes (See IRS Clarifies 409A NQDC Rules’ Impact on Teacher Comp).