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Last week, the Treasury Department released the “Green Book,” formally known as the General Explanations of the Administration’s Revenue Proposals.  Among its proposals, the Green Book includes a new proposal that could signal stepped-up enforcement of section 409A, as well as a new tool for the IRS.  Section 409A, adopted almost two decades ago, represented a significant shift in the tax treatment of non-qualified deferred compensation plans.  Prior to its adoption, these plans often relied on traditional concepts of constructive receipt to determine when it was required that a plan participant recognize income.  Section 409A overlaid those principles with significant new rules regarding the time that an election to defer compensation must be made, as well as limitations on the time and form of payment of deferred compensation.
Continue Reading Administration Proposes New Withholding Requirements for 409A Failures

Last week, the Treasury Department released the “Green Book,” formally known as the General Explanations of the Administration’s Revenue Proposals.  Among its proposals, the Green Book suggests the expansion of the requirement to collect Forms W-9 to additional payments.

Under current law, payors are required to backup withhold on certain payments to payees…

Last week, the Treasury Department released the “Green Book,” formally known as the General Explanations of the Administration’s Revenue Proposals.  Among its proposals, the Green Book addresses the treatment of on-demand pay arrangements.  These arrangements, which have recently grown in popularity, permit employees to access a portion of their earned wages in advance of the employee’s normal pay date.  For this reason, they are often referred to as “earned wage access programs.”

One of the potential tax concerns with these arrangements has been that, depending upon the program design, the employee could be considered to be in “constructive receipt” of their earned wages.  This creates payroll withholding and depositing obligations for employers regardless of whether the employee actually receives a wage payment.  In addition, the program can cause uncertainty regarding how to properly calculate the required FICA tax and income tax withholdings when the employee elects to receive a payment of earned wages.  For this reason, some third-parties designing the programs (which are often app-based) have sought either to structure the programs as loans or to avoid the constructive receipt issue by requiring the payment of a small fee when the earned wages are paid.
Continue Reading Treasury Stakes Out a Position on “On-Demand Pay” Arrangements

[This is a guest post by Ed McClellan and Thomas Reilly that was originally published on June 2, 2021, in Covington’s Global Policy Watch Blog.]

 In mid-May, the Biden Administration officially threw its support behind a minimum global corporate income tax rate of at least 15%.  The U.S. proposal would be limited to the world’s 100 largest companies – those with revenues of over $20 billion.  The proposal would not depend on the company’s nationality (the U.S. has made clear that it would not support any proposals that discriminate against U.S. multinationals) and, since it would apply to digital services companies as well as to those selling tangible goods, would not be specific to any one sector.
Continue Reading A Proposed Global Minimum Corporate Income Tax Rate