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Tax Bill Makes Major Changes To Deferred Compensation Rules
In early October, Congress passed the American Jobs Creation Act of 2004 (Bill). President Bush is expected to sign it shortly. The Bill includes a number of tax breaks and is primarily directed toward ending export subsidies that were declared illegal in 2002 and that caused the European Union to impose tariffs on certain imports from the U.S.
In addition, the Bill includes provisions affecting deferred compensation that have been described as a “sea change” by senior government officials. Prior to enactment of the Bill, there was substantial flexibility in designing deferred compensation plans and the IRS had a miserable record when it attempted to litigate cases involving deferred compensation; the taxpayer almost always won. The IRS attempted to tighten the deferred compensation rules by way of regulations it issued in 1978, but Congress overrode those regulations. The Bill includes the first changes in decades to the tax rules regarding deferred compensation.
Specifically, unless a number of detailed requirements set forth in new Section 409A of the Internal Revenue Code are satisfied, employees will be taxed currently on deferred compensation rather than when they actually receive the compensation. In addition, interest penalties and IRS excise taxes could also apply. Finally, employers will be required to withhold income and trust fund taxes. Thus, there is a big incentive to comply with the rules, some of which include the following:
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Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
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