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Interrogation from the Language Police: “Also, thefts and other frauds were extraordinary.” Does this mean that the amount of thefts and other frauds was extraordinary, i.e. rampant? Or does it mean that thefts and other frauds were uncommon, and therefore extraordinary?

Still are.

Well, I would agree with Dare Johnson but for the regs under 3121(v)(2). Arguably, the IRS has tolled the statute of limitations with regard to FICA on nonqualified deferred compensation under those regulations. 3121(v)(2) states when nonqualified deferred comp is to be taken into account for purposes of FICA. I am not going to go through the rules. But you should note that if an employer does not follow the special timing rule, Treas. Reg. § 31.3121(v)(2)-1(d)(1)(ii) provides that the general timing rule will apply. This means that if FICA taxes have not been withheld and remitted upon vesting/performance, they must be withheld and remitted when the compensation is actually or constructively received. In addition, the non-duplication rule won't apply, resulting in the full balance of the deferred comp payment (i.e., including earnings) at the time of distribution being subject to FICA. Under the non-duplication rule, once the comp is "taken into account" for FICA purposes, the earnings on the amounts taken into account escape taxation. If non-duplication rule doesn't apply, the general result is more FICA tax will be paid (than if it applies), and also employees receiving distribution payments in retirement are less likely to have met the Social Security wage base during those years. Prior to 2017, employers could request a settlement agreement with the IRS that allowed them to remit in the current year the amount that should have been withheld in accordance with the special timing rule, preserving the applicability of the non-duplication rule, and not having to restate reporting for prior years. But it was eliminated. Also, there are potential litigation risks… see Davidson v. Henkel Corporation … an employer may have liability to employees if they do not apply the special timing rule, depending on the terms of the NQDC plan document. In Davidson, a former employee receiving distributions from his employer’s NQDC plan, sued when they took FICA from his distributions stating the company should have withheld FICA sooner (i.e., at vest) under the special timing rule. Because the company failed to properly withhold FICA tax, his ultimate tax hit was increased because he lost the benefit of the non-duplication rule. The company argued they could use the special timing rule or the general timing rule. The court agreed but then said the plan doc language required that they would follow the special timing rule. Since the company violated the terms of the NQDC plan they breached the contract and were held liable. Also if reported on 1099, don't see how FICA was accounted for because there is no where on the 1099 to do that.