Employment Tax

Covington represents and advises a wide array of employers on a range of employment tax issues. Covington’s lawyers are skilled advocates with a reputation for efficiently resolving employment tax disputes with the IRS and state tax agencies on a favorable basis. We also proactively advise clients on designing executive and rank-and-file compensation programs in a tax-efficient manner, as well as on the correct tax consequences of new and existing compensation programs. Our tax lawyers have extensive experience advising on innovative fringe benefit programs, including executive perks provided to employees and directors, worker classification, and tip reporting. This includes the complicated timing rules applicable to the taxation of nonqualified deferred compensation, Form W-2 reporting, the taxation of equity compensation, and the deductibility of different forms of employee compensation, including in a cross-border context.

Capabilities

• Defending employers’ tax treatment of fringe benefit programs in tax audits
• Representing employers in IRS and state employment tax audits
• Designing innovative fringe benefit programs that are tax-efficient and meet the client’s goals for employee recruitment and retention
• Structuring cross-border compensation programs to avoid sub-optimal employment tax outcomes
• Advising on employment tax issues in mergers and acquisitions
• Advising on the Voluntary Classification Settlement Program
• Voluntarily correcting employment tax errors without penalty under the interest-free adjustment rules