Withholding Judgment: IRS Issues Guidance On Reporting And Withholding For Nonqualified Deferred Compensation

On December 1, 2006, the IRS issued Notice 2006-100, which addresses reporting and withholding with respect to nonqualified deferred compensation subject to section 409A of the Internal Revenue Code (the Code). Most significantly, the Notice provides that 2006 deferrals under arrangements that comply with section 409A do not need to be reported on Form W-2 or Form 1099-MISC. However, the Notice does require reporting and withholding with respect to deferrals under arrangements that fail to comply with section 409A. Also, the Notice provides guidance with respect to the procedures for reporting, withholding and calculating the amounts taxable for non-409A-compliant arrangements.