Law Firms Ask for Second 409A Deadline Delay

September 24, 2007 ( - A group of nearly 100 law firms has once again asked the Internal Revenue Service (IRS) to push back the deadline to bring documents into compliance with 409A nonqualified deferred compensation regulations even after the IRS recently granted a limited compliance extension.

The IRS has already extended the document compliance date for the regulations issued in April,   which provided guidance regarding the requirements for deferral elections and payment timing under section 409A (See IRS Issues Final Regulations for NQDC PlansFinal 409A Regs Include Important Modifications, Clarifications). 

The first IRS notice extended the document deadline for one year and provided additional limited transition relief, but did not extend the January 1, 2008 effective date of the final regulations, the IRS said in the announcement See  Law Firms Ask for Extension on 409A ComplianceIRS Extends Deadline for 409A Document Compliance ).

However, the 96 law firms signing the latest letter  still want more time, arguing that significant resources will be needed for compliance efforts. The group is asking that the deadline be pushed back to December 31, 2008.

The American Bar Association Section of Taxation also sent a letter to the Internal Revenue Service and the Treasury Department on September 21 asking for an extension of the 409A compliance date.

“In light of the scope and complexity of Section 409A and the final regulations, this period is not sufficient to ensure an orderly business process leading to compliance with Section 409A which is both thorough and reflects appropriate analysis by the taxpayers and other stakeholders of the business and other policy issues raised by the required operational changes and amendments,” according to the ABA letter.