WASHINGTON, D.C. (January 23, 2006) – Gary McGarrity, president and CEO of Intronn, and Lawrence Tamarkin, president and CEO of CytImmune Sciences Inc., will testify on behalf of the Biotechnology Industry Organization (BIO) Wednesday on proposed regulations pertaining to the Internal Revenue Code (IRC) Section 409A.
Approved by Congress in 2004 as part of the American Jobs Act, IRC Section 409A imposes income tax liability and penalties on company employees who presumably receive below fair market value stock options. The law takes effect Jan. 1, 2007.
BIO has raised concerns about ambiguity regarding the Internal Revenue Services’ (IRS) proposed methodology for determining the value of stock options, especially for private companies, according to Morrie Ruffin, BIO’s executive vice president of capital formation and business development.
“If the proposed regulations are not further clarified and implemented appropriately, it will hinder the entrepreneurial spirit of the best and the brightest talents who could be working toward a cure for many of the ailments facing Americans today,” Ruffin said.
The IRS and the U.S. Department of Treasury are accepting stakeholder comments on pending regulations associated with law. As part of the comment process, the IRS and treasury department will hold a public hearing at 10 a.m. Wednesday, Jan. 25 at the IRS building located at 1111 Constitution Ave. NW, Washington DC, Room 7218. McGarrity and Tamarkin are expected to testify between 11:30 a.m. and 1:30 p.m.
In comments recently submitted to the IRS, BIO suggests that company management or boards of directors are in the best position to assess the value of stock options in good faith. The valuation should be honored by the IRS unless the assessments were done in bad faith.
BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and 31 other nations. BIO members are involved in the research and development of healthcare, agricultural, industrial and environmental biotechnology products.