IRS Issues Guidance Regarding the Limitations of the Emergency Economic Stabilization Act of 2008 on Offshore Deferrals

As previously reported, the Emergency Economic Stabilization Act of 2008 (the Act), which was enacted in October 2008, significantly limits the ability of certain offshore entities to defer compensation to U.S. taxpayers. Specifically, the Act added Section 457A to the Internal Revenue Code (the IRC), which generally imposes unfavorable tax treatment on taxpayers deferring compensation that is received from entities located in certain foreign tax havens. In January, the Internal Revenue Service (the IRS) issued Notice 2009-8, which provides interim guidance with respect to the application of Section 457A.

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