M&A Alert – Potential US Tax Issues on Employee Severance and Bonus Payments
Employees of U.S. subsidiaries of Canadian public companies or Canadian-based employees who are U.S. citizens and who are entitled to severance and/or bonus payments upon the termination of employment under the terms of their employment agreements may be required to pay significant additional tax to the IRS over and above the normal tax payable on such payments if such payments are contrary to certain provisions of the U.S. Internal Revenue Code. We therefore recommend that U.S. benefits counsel review the employment agreements of such individuals. If the employment agreement was not reviewed by U.S. benefits counsel prior to its effective date, it may still be possible to amend the agreement later to eliminate or reduce the tax that the employee must pay.
For more information on the above, please see the M&A Alert which has been provided to us by Dorsey & Whitney LLP.
This blog discusses issues relevant to mining exploration and development companies carrying on business in Canada and around the world. Topics include acquiring and developing mineral projects, organizing and financing resource companies and mergers and acquisitions.
Axium is a leading Vancouver based boutique law firm specializing in securities law, mergers and acquisitions, corporate and business law.