Noncompliance with Code §409A Sample Clauses
The Noncompliance with Code §409A clause addresses the consequences and procedures if a compensation arrangement fails to meet the requirements of Section 409A of the Internal Revenue Code, which governs the taxation of deferred compensation. Typically, this clause outlines the steps the parties must take to correct or mitigate any noncompliance, such as amending the agreement or making corrective payments, and may specify who bears responsibility for any resulting tax penalties. Its core function is to allocate risk and provide a clear process for handling inadvertent violations, thereby protecting both parties from unexpected tax liabilities and ensuring compliance with federal tax law.
Noncompliance with Code §409A. To the extent that the Company or the Committee takes any action that causes a violation of Code §409A or fails to take any reasonable action required to comply with Code §409A, Apache shall pay an additional amount (the “gross-up”) to the individual(s) who are subject to the penalty tax under Code §409A(a)(1); the gross-up will be sufficient to put the individual in the same after-tax position he would have been in had there been no violation of Code §409A. The Company shall not pay a gross-up if the cause of the violation of Code §409A is the due to the recipient’s action or due to the recipient’s failure to take reasonable actions (such as failing to timely provide the information required for tax withholding or failing to timely provide other information reasonably requested by the Committee – with the result that the delay in payment violates Code §409A). Any gross-up will be paid as soon as administratively convenient after the Committee determines the gross-up is owed, and no later than the end of the calendar year immediately following the calendar year in which the additional taxes are remitted. However, if the gross-up is due to a tax audit or litigation addressing the existence or amount of a tax liability, the gross-up will be paid as soon as administratively convenient after the litigation or audit is completed, and no later than the end of the calendar year following the calendar year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the litigation.