A surprise ruling from the Internal Revenue Service might send companies scrambling to review the termination provisions of compensation plans intended to satisfy Section 162(m) of the federal tax code.
In a private letter released Jan. 25 that appears to reverse a previous IRS position, the agency said that a plan that allows performance-based compensation payable upon a termination without cause and without regard to performance does not qualify for the performance-based compensation exemption to the $1 million dollar deduction limit under Section 162(m).
