IRS Targets Executive Compensation

Originally Published MX July/August 2004

BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT

Employers can protect themselves by reviewing their compensation programs for compliance with current tax laws and consistency with the company's goals.

Ted Ginsburg

Following the recent wave of scandals at publicly traded corporations, the U.S. government's crackdown on corporate governance is heating up. The Internal Revenue Service (IRS) recently announced that it is embarking on a new audit initiative focused on executive compensation. While this new program deals with a very visible area of business, the agency's scrutiny should cause both employers and executives to more closely examine the types of compensation programs that are available.

This article will discuss why the IRS is looking at executive compensation, what areas the agency is (and is not) reviewing, and what employers can do to minimize their chances of being audited.

Why Now?