IRS Announces New Compliance Program Allowing Employers to Pay Section 409A Penalties on Stock Rights Exercised in 2006; Employers Must Act Quickly to Participate

On February 8, the Internal Revenue Service (IRS) issued Announcement 2007-18, establishing a compliance program that allows employers to pay the taxes and interest imposed by Internal Revenue Code Section 409A on discounted stock options or stock appreciation rights (SARs) that were exercised by certain employees in 2006. Employers wishing to take advantage of this program must file a notice of their intent to do so with the IRS no later than the end of this month.