The law firms, writing to the Acting IRS Commissioner Kevin Brown and to the Treasury Department, 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 Final Deferred Compensation Regulations Issued).
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 January 1, 2009 and that the transition relief be extended until December 31, 2008.
“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. Olshan said the rules included almost 400 pages of new and “intricate” requirements. Having companies rush through the implementation of the regulations in such a tight time frame will lead to mistakes, oversights and errors, the letter said.
The regulations, part of the American Jobs Creation Act of 2004, address tax treatment of compensation workers earn in one year that is not paid until a future year.