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Due to budget constraints, the IRS plans to stop issuing determination letters for periodic compliance. Under current procedures, companies file for letters of determination in a five-year cycle. The process allows companies to receive IRS validation of plan changes.

As expected, the IRS has proposed regulations that would require employers to withhold taxes on stock option exercises or purchases under incentive stock option (ISO) plans or employee stock purchase plans (ESPPs).

On June 24, the IRS issued what it termed a clarification of the rules regarding performance-based equity compensation.

On January 5, the IRS issued Notice 2010-6, which establishes a document correction program for nonqualified deferred compensation programs under Internal Revenue Code Section 409A.

The IRS has published its annual update of plan contribution and benefit limitations for 2009. Key changes for ESOP companies include:

The Internal Revenue Service has published sample plan language to prevent violation of the Section 409(p) S ESOP corporation anti-abuse rules that prevent disqualified persons from ending up with more than 49.9% of the total deemed-owned shares of the company.

Representatives from the IRS have informally told ESOP advisors that they were putting on hold approving plan provisions that segregate ESOP accounts at termination until the agency comes up with a position on this issue.

The IRS' Advisory Committee on Tax Exempt and Government Entities said in a June 2016 report (PDF) that the planned overhaul of the determination letter system is a mistake, although it recognized that making f

The plan by Travelers Group to contribute stock options to its 401(k) plan is getting another look from the IRS. The IRS had initially given the first-of-its kind plan a favorable private letter ruling, but it now is reexamining the issue.

IRS Notice 2016-03 confirms that "expiration dates on determination letters issued prior to January 4, 2016 are no longer operative." More on this will be in the forthcoming newsletter and at the NCEO's