Employee-Owned Companies Put on Notice of Looming IRS Crackdown

The IRS is cracking down on the methods employee-owned companies use to transfer assets to their workers, raising the stakes for an industry that says it’s been plagued by years of US Labor Department investigations and lawsuits.

The IRS issued a notice (IR-2023-144) Wednesday that targets employee stock ownership plans, or ESOPs, which are retirement plans that give employees a stake in their company. The move is part of the Biden administration’s effort to ensure high-income taxpayers pay their fair share, the agency said.

Employee ownership advocates claim ESOPs have been unfairly targeted by an 18-year DOL enforcement ...