On July 21, 2018, the IRS published IRS Notice 2018-68, which provides guidance on some of the key changes made to Section 162(m) by the Tax Cuts and Jobs Act of 2017.
The key provisions covered by the guidance include:
- Determining who is a covered employee (hint: the test is different from it used to be!)
- Determining whether an amount is grandfathered under the old Section 162(m) rules (hint: the key question to ask is whether the company has a binding legal obligation to pay a certain amount of compensation to the executive?)
- Determining what will cause a modification of a written binding contract that was in place on November 2, 2017.
The Treasury and the IRS are also seeking comments on the use of the SEC proxy disclosure rules for purposes of determining the three highest paid executives other than the PEO and PFO.
The IRS Notice can be found at:
EC Minute Podcast
Here is the EC Minute podcast I just released on this topic: