FTB follows IRS Notice 2007-100
For IRC section 409A
On December 3, 2007, the Internal Revenue Service (IRS) released Notice 2007-100 (available online). It allows taxpayers to correct certain operational failures of nonqualified deferred compensation plans in order to comply with IRC Section 409A. Because California Revenue and Taxation Code (Sections 17501 and 24601) conforms to IRC Section 409A, FTB is following IRS Notice 2007-100.
Service recipients or service providers, e.g. employers or employees respectively, that rely on IRS Notice 2007-100 for federal income tax relief must follow the Notice's information and reporting requirements. To follow these information and reporting requirements, service recipients and providers must attach statements to their respective federal income tax returns.
For California income tax purposes, however, service recipients or providers that rely upon the Notice for relief are not required to submit additional statements to FTB as attachments to their California income tax returns. We require service recipients and providers to retain a copy of the information in their records, and may request these documents at a later date.
Although FTB follows IRS Notice 2007-100, this does not relieve the service recipient of employment taxes or penalties, if applicable.
For further information, please contact Jeanne Sibert at 916.845.5554, or Deirdre O'Connor at 916.845.7335.