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ID Protection Services Not Taxable to Victims of a Data Breach

In Announcement 2015-22, the IRS announced that the value of identity protection services, such as credit monitoring, identity theft insurance policies, and identity restoration services, provided to an employee whose personal information may have been compromised in a data breach is not taxable as gross income. The Announcement does not apply to cash received in lieu of identity protection services; identity protection services received for reasons other than as a result of a data breach, such as services received in connection with an employee?ÇÖs compensation or benefits package; or proceeds actually received under an identity theft insurance policy. Announcement 2015-22 is available here.

IRS Announces that Employee Plans Will No Longer Answer Legal Questions via E-mail

The IRS announced that, effective October 1, 2015, Employee Plans (?Ç£EP?Ç¥) will no longer answer technical questions by e-mail. Due to recent staffing changes, EP no longer has the resources to do research and provide answers for legal topics. Instead, the IRS is directing employers to its online resources and recommending that employers request a private letter ruling. A private letter ruling is a written statement that interprets and applies tax laws to a taxpayer?ÇÖs specific set of facts. The IRS announcement is available here.

IRS Section 409A Audit Initiative

The IRS is currently conducting Section 409A audits of certain taxpayers that were selected initially for employment tax audits. To date, fewer than 50 taxpayers have been selected for the Section 409A audits, and those taxpayers were selected based on the probability that the taxpayers would have nonqualified deferred compensation plans. The audits are focusing on the deferred compensation paid during the year under examination and are limiting the review to deferral elections and payouts (including application of the six-month delay rule). Generally, the audits have been limited in scope to the top ten most highly-compensated employees.

IRS Releases FAQ Relating to Same-Sex Couples

The IRS recently released answers to frequently asked questions regarding taxation of same sex couples.?á In the FAQ, the IRS reinforces its position that provisions of the federal tax law that apply only to married taxpayers or their spouses?ádo not apply to same-sex partners because federal law does not treat same-sex partners as married for federal tax purposes.?á The FAQ can be found here.

IRS Releases Interim Summary of its Findings from its 401(k) Questionnaires

An IRS report details the interim findings from the surveys the IRS issued to plan sponsors and provides information regarding different aspects of 401(k) plans being offered. It also indicates that many plan sponsors are not aware of the resources available to plan sponsors on its website?áand in general. The summary is available on the IRS website.

December 2021
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