The Treasury and the Internal Revenue Service (IRS) issued Notice 2006-100, Reporting and Wage Withholding Under Internal Revenue Code Section 409A on Thursday, providing guidance to employers and payers on their reporting and wage withholding requirements for calendar years 2005 and 2006, with respect to deferrals of compensation and amounts includible in gross income under Code Section 409A and relief from reporting deferrals that are not includible in income during those years.
Notice 2006-100 supersedes Notice 2005-94, issued last year, which alerted employers and payers that they might have to file amended information returns to report amounts includible in income for 2005. Interim rules are provided for 2005 and 2006 on calculating amounts includible in gross income under Code Section 409A, in Notice 2006-100. In addition to applying to employers and other payers who must report and withhold on the amount to be included in income under Section 409A, these rules apply to service providers who must include amounts in income pursuant to Code Section 409A. Notice 2006-100 also provides guidance to service providers on the income tax reporting and tax payment requirements for amounts includible in gross income under Code Section 409A for 2005 and 2006.
Under the relief provided by Notice 2006-100, employers and other payers need not report annual deferrals of compensation that are not includible in income under Code Section 409A on Form W-2 or Form 1099-MISC, for 2005 or 2006. Amounts includible in income under Code Section 409A for 2005 and 2006, however, must be reported on Form W-2 or Form 1099-MISC.