7 February 2008 - In a surprising turn of events, the IRS recently issued a private letter ruling (PLR) that reverses its prior position relating to the effect of severance provisions on performance-based compensation arrangements under Section 162(m) of the Internal Revenue Code (relating to the $1 million limit). The IRS's prior position, set forth in prior PLRs, generally held that severance provisions would not adversely affect whether a compensation arrangement satisfied the performance-based compensation exception under Section 162(m).