Corporate Securities Law Blog

Effective December 1, 2005, the SEC adopted new rules extensively revising disclosure and process under the Securities Act. Three new rules will also affect disclosures contained in periodic reports filed by many issuers under the Exchange Act.

The IRS released Notice 2005-94 suspending employer reporting and wage withholding requirements for deferred compensation under IRC Section 409A for calendar year 2005. The Notice does not affect FICA or other employer withholding and reporting obligations. Future IRS guidance may require employers to furnish corrected information returns and payee statements reporting any previously unreported amounts taxable under Section 409A. The IRS anticipates issuing guidance on the employer's reporting and withholding requirements in the first half of 2006.

In September 2005, the IRS issued proposed regulations under Section 409A of the Internal Revenue Code, which expand upon existing guidance and, in some ways, interpret Section 409A more favorably for taxpayers than previous guidance. Companies must comply in good faith with Section 409A during 2005 and 2006. Employers may rely on the proposed regulations to demonstrate good faith compliance for 2005 and 2006. The proposed regulations generally extend the deadline for amending arrangements to comply with Section 409A until December 31, 2006. Certain actions, however, must be completed before the end of 2005.