LB&I LB&I EMPLOYMENT TAX PROGRAMEMPLOYMENT TAX PROGRAM

October 8, 2010October 8, 2010

LB&I

• John Smith• LB&I Employment Tax

Specialist• Smith.John@irs.gov• 999-999-9999 X1001

EMPLOYMENT TAX PROGRAM

• Heather Maloy – LB&I Commissioner• Kathy Robbins - Director Field Specialist• Howard Martin - Acting DFO (Deputy Director) • Robin Arnold - National Program Manager• Kathy VanDeventer - ET Specialty Analyst• Walter Hall - ET Manager

Employment Tax Program

• Total 9 ET Groups Nationwide

• Group 1164, total 8 ET Specialists working in So. Calif. Area that covers

– San Diego– Santa Ana– Long Beach– El Segundo– Glendale

ROLE OF LB&I ET SPECIALIST

•Informal Request•Consulting•Compliance•LB&I Cases – CIC & IC

ROLE OF LB&I ET SPECIALIST

Informal Request

•Quick questions answered •Quick guidance provided

ROLE OF LB&I ET SPECIALIST

Consulting• Maximum time = 8 hours• Background Research – SEC filings (Annual Report 10K,

Proxy Statement 14A, F-4s, and / or Company Website) • ET Specialist suggested IDR issued by TC / responses

reviewed by ET Specialist• Provide guidance • IDRS (INOLE, BMFOLU, TRPRT, BRTVU, etc.)• Reject / Accept?

ROLE OF LB&I ET SPECIALIST

Compliance

•Executive Compensation•Number of employees affected•Dollar amount

ROLE OF LB&I ET SPECIALIST

LB&I Cases – CIC & IC

• Executive Compensation • Salary & Wages

Schedule M-3, Form 1120

LB&I Cases – CIC & IC

Executive Compensation • Key Executive Benefits• Stock Based Compensation• Non Qualified Deferred Compensation• Golden Parachute

Executive CompensationKey Executive Benefits

• Search executive benefits from 10 K, 14A, employment contract, Compensation Committee Minutes, IDR response…

Executive CompensationStock Based Compensation

• Non Qualified Stock Options• Incentive Stock Options (ISO) /

Backdated Stock Options• Stock Appreciation Right (SARs)• Restricted Stock §83

Executive CompensationNon Qualified Deferred Compensation§409A • Executives Deferred Compensation

under NQ Plan• Restrictive Use?• Section 83• Funded / Unfunded?• Rabbi Trust

Executive CompensationGolden Parachute §280G• Change in control• Large payments that are in the nature of

compensation• made to or for the benefit of a “disqualified

individual” • aggregate present value is equal to or greater

than three times the "base amount"

LB&I Cases – CIC & ICSalary & Wages• Expatriates • Relocation Benefits• Per Diem Payments and Other • Prizes and Awards• Employment Litigation & Settlement• Severance• Bonus• W-2 and Form 1099 Matching • Worker Reclassification, Section 530• Other Employee Benefits

Referrals•Specialist Referral System (SRS)•Submit Referral with LIN link•ET Manager Reviews

– Consulting, Reject, Accept– formal Referral

Referral AcceptanceET Specialist Will:

• Examination of selected Payroll return (940, 941, 945)

• Open and own case in IMS • Martinsburg files W-2 & 1099 requested• Review LIN link• Analyze Schedule M-3 for ET issues• SEC Filings (10K, 14A, etc.)• IDRS – BMFOLU, INOLE, TRPRT, RTVUE, etc.• Review IDR response (Consulting Referral)• Technical Guidance

Referral Reject•Limited Resources•Limited time•Lack issue potential•TC can resubmit at a later time

Mandatory Review – Officer Returns

• IRM 4.46.3.6.7 – Debbie Nolan Memo• Review 1040 Return or TRPRT • CEO and top highest paid officers• DON’T request from TP (1120, 1120s, etc.)• DON’T inform the TP (1120, 1120s, etc.) that

you are requesting officer returns.• Letter 3996 (officer letter)• 1040 Examinations – LB&I TC or Refer to SBSE

TEAM COORDINATOR’S TO DO LIST

Prior to the ET Specialist’s arrival the following should be present:

1. LIN link2. M-3 work papers3. Response to ET suggested IDR (Issued by TC during

consulting phase) 4. CAS - Accounts Payable files (cash disbursements) / Vendor

Analysis5. Key Officer tax returns (CEO & top highly paid officers)6. Access to BOD Minutes / Compensation Committee Minutes

(immediately following the ET Specialist arrival)

The EndThe End

Question?Question?