Law.com reports that the IRS has made sweeping changes to its deferred compensation rules that affects common business compensation practices, including stock options, bonuses, and severance policies. The new rules impose tougher standards and penalties for violations. Compliance is due by December 31, 2007.
Employers should review the changes with counsel to ensure that their policies meet the new standards. Don't assume that they don't apply to you. And the penalties for non-compliance have teeth.
As one employment attorney put it:
"A lot of clients are sort of in denial of [the rules]," said Harrelson of Nashville, Tenn.'s Waller Lansden Dortch & Davis. He believes the rules will catch many employers by surprise. "They are so broad and so invasive that you can have people you never dreamed of falling under these rules."
Now you know. Don't be one of those caught by surprise.