IRS Acts After Law Firms Seek Extension

Tax Law

Posted Sep 11, 2007, 07:03 am CST
By Debra Cassens Weiss

A request by 92 large law firms has been answered.

The law firms asked the Internal Revenue Service to extend the deadline for compliance with new deferred compensation rules under section 409A of the Internal Revenue Code. Weeks later, the IRS has extended the deadline by one year, giving companies until Dec. 31, 2008, to comply, the New York Law Journal reports.

The firms had argued their clients did not have enough time to respond to new rules, adopted in April, that may treat bonuses, severance packages and stock options as deferred compensation. Violations could bring a hefty 20 percent tax penalty, ABAJournal.com noted in earlier coverage.