When Are Commissions Earned?

[Guest Exec Comp]

409A offers a special rule to determine when an employee is treated as "providing the services" for commission payments. In the preamble, the IRS states that the reason for this is that it is hard to determine when the services are performed for commissions.

Unfortunately, the sales commission compensation rule is limited. For example, an employee does not receive sales commission unless a "substantial portion of services provided" consist of "direct sale of a product or service to an unrelated customer."

What if the employee only does a little "direct sale" work but wants to defer his commissions? When are the services performed then?

[Ron Snyder]

(noises: closing door, drawing shades, checking for bugs)

When did you want them to be performed?