To those who may be holding out hope that the Internal Revenue Service will relent on the year-end deadline for compliance with the final Section 409A rules governing deferred compensation: It isn’t looking good.

Attorneys at the law firm Wachtell Lipton Rosen & Katz recently published an alert calling for Treasury and the IRS to delay the documentary compliance requirements of Section 409A, or to limit the application of the Dec. 31, 2008, deadline to the Section 16 officers of public companies so management and boards can focus on the financial crisis. WLRK also suggested the IRS say that good faith efforts to comply with the final regulations, both in form and operation, will be acceptable.

“America’s corporate resources should be focused on business matters in this critical and uniquely difficult time, without the worry that a vast portion of its workforce will be subject to a punitive and draconian tax on New Year’s Day,” WLRK attorneys Michael Segal, Jeannemarie O’Brien, and Ian Levin wrote.

However, IRS spokesman Anthony Burke in an Oct. 7 e-mail response tells Compliance Week, “Currently there is no plan to extend the deadline.”

As Compliance Week has covered extensively, a “good faith” transition period for compliance is in effect until Dec. 31, 2008. Any compensation arrangement subject to Section 409A must be amended to comply with the final regulations by that date. The final regulations, issued by the Internal Revenue Service in 2007, become fully effective Jan. 1, 2009. Potential consequences for non-compliance include immediate income taxes and a 20 percent penalty tax to the affected employee.