IRS Allows Delay in Reporting and Withholding on Deferred Compensation

In Notice 2005-94, the IRS announced it is suspending the withholding requirements for 2005 with respect to deferrals of compensation covered by the deferred compensation rules of Section 409A of the Internal Revenue Code. Service providers also do not have to determine the amount that may be due under the new rules in 2005, but will have to pay them in 2006 once the employer can provide information telling the employee what is due. The IRS is working on regulations to provide guidance for employers for 2006.