With the ink barely dry on recent amendments to the “Tax Cuts and Jobs Act,” which was initially introduced in the US House of Representatives by Ways and Means Committee Chairman Brady on November 2, 2017, the Joint Committee on Taxation released a 247-page description of the Senate Finance Committee Bill of the same name.
Although the Senate “conceptual mark” has many similarities to the House Ways & Means Bill, it would make sweeping and drastic changes to the taxation of nonqualified deferred compensation that are no longer included in the House Bill. In this Legal Update, we outline (i) the principal provisions of the Senate Bill that would affect the taxation of nonqualified deferred compensation, (ii) provisions in both the House and Senate Bills that would modify the rules of Code Section 162(m) governing corporate deductions for compensation paid to certain executives and would impose excise taxes on certain compensation paid by tax-exempt entities, (iii) provisions in the House Bill applicable to certain equity awards granted by private companies , and (iv) miscellaneous proposed changes to the rules governing qualified plans and welfare.
Many of the changes are proposed to go into effect as soon as January 1, 2018. So even though the terms of the final law, if enacted, will undoubtedly be different from each Bill’s current terms (for example, two amendments to the Senate Bill are pending or anticipated as we go to press), employers should be aware of how the proposals may affect their benefit plans and compensation arrangements.