IRS Publishes Additional 409A Reporting, Withholding Instructions

According to Section 409A guidance issued Wednesday by the U.S. Treasury Department and the Internal Revenue Service (IRS), an employer is not required to report nonqualified deferred compensation plan amounts until the agencies release further instructions.

In Notice 2008-115, the agencies also said that until further guidance is made available, a payer is not required to report amounts deferred during the year under a nonqualified deferred compensation plan in box 15a of Form 1099-MISC.

In addition to reporting and withholding guidance, Notice 2008-115 provides guidance to service providers on their tax reporting and payment requirements under 409A. Generally, these requirements reflect an extension of the guidance provided in Notice 2006-100 and Notice 2007-89 applicable to calendar years 2005, 2006, and 2007, the agencies indicated.

According to Wednesday’s document, the interim guidance is effective for calendar year 2008 and will stay in effect until the next guidance documents are published. Officials said they do not anticipate further guidance will be issued until the recently proposed 409A regulations addressing the calculation of the amount includible in income under 409A(a) and the calculation of the additional taxes under 409A(a) are finalized.

Treasury Department and IRS officials also said such guidance will not be made effective before the calendar year beginning after such regulations are finalized further as such regulations deal with annual deferral reporting.

Officials from the two agencies noted that the final 409A regulations released April 10, 2007, do not address reporting and withholding requirements, so they do not supersede Notice 2005-1, Q&A-24 through Q&A-38, addressing those issues.