On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which addresses the public economic and health crisis related to the 2019 novel coronavirus (COVID-19). The CARES Act includes a temporary provision that allows employers to make tax-free student loan payments on behalf of employees pursuant
Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE
Compensation Questions
Department of Labor’s New Guidance Helps Employers of Uniformed Service Members Manage Pension Obligations
By Lisa Rippey on
The Department of Labor’s Veterans Employment and Training Services (“VETS”) issued a new fact sheet (“Fact Sheet”) to help employers better manage their pension obligations under the Uniform Services Employment and Reemployment Rights Act (“USERRA”). USERRA creates certain rights and protections for uniformed service members. For example, under USERRA, service members who were reemployed after…
IRS Approves Student Loan Repayment “Match” Under 401(k) Plan
By Mark Wilkins on
One of the clear trends in employee benefits involves companies offering assistance with their workforce’s student loan repayments. The reasons are obvious. Student loan debt is now the largest source of consumer debt after housing and that will likely be the case for the foreseeable future. This financial insecurity has a clear link to workplace…
All Businesses, even if not Subject to 162(m), Should Consider Gathering Data to Support Future Deduction of Deferred Compensation under the Grandfather Rule
By Audrey Fenske on
As mentioned in a previous blog, the IRS has issued its initial guidance on Code Section 162(m), as modified by the Tax Cuts and Jobs Act. One important aspect of the guidance is its discussion of preserving deductibility under the transition rule, also known as the 162(m) “grandfather” rule. Under the grandfather rule, compensation paid…
IRS Guidance Provides Some Clarity, but Leaves Questions Unanswered under 162(m)
By Audrey Fenske on
On August 21, 2018, the IRS issued its initial guidance on the amendments to Section 162(m) made by the Tax Cuts and Jobs Act, in the form of Notice 2018-68. The guidance is fairly limited and does not completely address some of the questions it takes on. Notably, the guidance on what compensation will…
IRS Wins One at Supreme Court: Severance Pay is Subject to FICA Tax
By Stinson LLP on
I blogged about the Quality Stores decision which at the district court and court of appeals levels held that certain severance payments were not subject to FICA (Social Security) taxes. The IRS had challenged the employer in that case and had lost in both lower courts.
At the Supreme Court level, the IRS won. The …
When is a LLC Profits Interest not a Profits Interest? U.S. Tax Court: “When it is a Capital Interest”*
By Jeffrey Cairns on
On December 2, 2013, the United States Tax Court issued its opinion in Crescent Holdings, LLC et al vs. Commissioner, 141 T.C. No. 15 (12/2/13) wherein it examined the tax rules applicable to transfers of partnership interests as compensation.
Crescent Holdings, LLC (“Holdings”) was a limited liability company and the parent company of Crescent …
Too Much Discretion With Respect to Annual Bonuses May Cause Deferral of the Employer’s Deduction
By Jeffrey Cairns on
In an IRS Field Attorney Advice Memorandum (FAA 20134301F) dated September 18, 2013, the IRS Office of Chief Counsel reviewed several common bonus plan designs in connection with a request for an opinion with regard to the timing of the employer’s tax deduction with respect to the accrual and payment of bonuses. Under the plans …
The Supreme Court Will Decide Whether FICA Taxes is Owed on Severance Pay
By Stinson LLP on
I blogged here and here about Quality Stores, a case in which the Sixth Circuit Court of Appeals held that severance pay is not subject to FICA (Social Security) taxes if certain requirements are met: The severance payments must be made pursuant to a plan, on account of an involuntary termination, and the result …
No More Pre-Tax Premiums for Individual Insurance Policies?
By Stinson LLP on
Over the years we have seen some employers, particularly small employers, choose to provide health coverage to their employees by paying all or part of the premium for individual insurance policies that the employees have obtained. Under an old IRS revenue ruling, Rev. Rul. 61-146, that type of premium subsidy could be provided on a …