Re: Excess OASDI Payments and Withholding Issue

FYI
----- Forwarded by Ann Ballard/Corp/Enron on 12/11/2000 11:10 AM -----

Rex Rogers
12/11/2000 11:01 AM

To: Ann Ballard/Corp/Enron@ENRON
cc: Sharon Butcher/Corp/Enron@ENRON, Kriste Sullivan/Corp/Enron@ENRON
Subject: Re: Excess OASDI Payments and Withholding Issue

Ann: I do not know anything about this---I very quickly glanced at the
materials, and what is suggested presents some pretty major issues (Michelle
is right---there are tax issues, corporate veil issues, and possibly other
technical employee benefit regulatory issues). This is clearly outside of my
area of expertise; I think this is probably more in Sharon's, Kriste's and
Pat's area. Why don't we discuss this at our staff meeting on Wednesday. If
we need to get together sooner, please let me know. Thanks, Rex.

Ann Ballard
12/11/2000 09:43 AM

To: Rex Rogers/Corp/Enron@Enron
cc:
Subject: Excess OASDI Payments and Withholding Issue

Rex -- Do you know anything about the below described proposal? I do not,
and don't know whether I should get involved.
----- Forwarded by Ann Ballard/Corp/Enron on 12/11/2000 09:41 AM -----

Michelle Cash@ECT
12/10/2000 04:28 PM

To: Tony Jarrett/Corp/Enron@ENRON, Robert Eickenroht/Corp/Enron@ENRON, Ann
Ballard/Corp/Enron@ENRON, fmackin@aol.com
cc: Sharon Butcher/Corp/Enron@ENRON, Kriste Sullivan/Corp/Enron@ENRON
Subject: Excess OASDI Payments and Withholding Issue

Do you have any thoughts/comments on the proposal discussed in the attached
email? Basically, the proposal is to create three holding companies that
will house all employees of Enron and its subsidiaries/affiliates, and then
"lease" the employees to the various business units in which they work.
Potential issues I see include tax and corporate veil issues.

Your thoughts would be appreciated.

Michelle

---------------------- Forwarded by Michelle Cash/HOU/ECT on 12/10/2000 04:25
PM ---------------------------

Bob Sparger@ENRON
12/01/2000 02:31 AM
To: Sharon Butcher/Corp/Enron@ENRON, Michelle Cash/HOU/ECT@ECT, Kriste
Sullivan/Corp/Enron@ENRON
cc: Cindy Olson/Corp/Enron@ENRON, Brad Coleman/HOU/ECT@ECT, David
O'Dell/HR/Corp/Enron@ENRON, Janice Priddy/HR/Corp/Enron@ENRON
Subject: Excess OASDI Payments and Withholding Issue

Sharon / Michelle / Kriste:

In late September, I sent a note on excess OASDI payment by Enron and excess
OASDI withholdings from employees when U. S. domestic employee transfers
occur between Enron BUs but never received a response - note David O'Dell's
e-mail below. Understand Enron has looked at this area before, but feel we
should look again to see if there are any viable alternatives to the current
situation.

Could you please look at the attachment in my original e-mail (below) and let
us know where we stand.how to proceed?

Thanks,

Bob

---------------------- Forwarded by Bob Sparger/Corp/Enron on 12/01/2000
08:26 AM ---------------------------

From: David O'Dell 11/30/2000 04:17 PM

To: Bob Sparger/Corp/Enron@Enron
cc: Janice Priddy/HR/Corp/Enron@ENRON

Subject: Excess OASDI Payments and Withholding Issue

Bob,

Janice and I met with E&Y Tax Services today to discuss a number of topics
including potential organizational structural modification strategies. One
strategy discussed was very similar to the proposal you made back in
September. We are planning to have the E&Y folks come back in to discuss
these ideas in more detail.

A couple of questions for you come to mind:
Did you ever get a response from Legal and/or Tax on your proposal?
Would you like to attend the next meeting with E&Y?

Please let me know your thoughts...

Thanks - David
---------------------- Forwarded by David O'Dell/HR/Corp/Enron on 11/30/2000
04:13 PM ---------------------------

Bob Sparger
09/29/2000 11:11 AM

To: Sharon Butcher/Corp/Enron@ENRON, Michelle Cash/HOU/ECT@ECT, Kriste
Sullivan/Corp/Enron@ENRON
cc: Cindy Olson/Corp/Enron@ENRON, Brad Coleman/HOU/ECT@ECT, David
O'Dell/HR/Corp/Enron@ENRON
Subject: Excess OASDI Payments and Withholding Issue

Sharon / Michelle / Kriste:

The enclosed document addresses excess OASDI payment by Enron and excess
OASDI withholdings from employees when U. S. domestic employee transfers
occur between Enron BUs.

The current situation results in significant Enron excess OASDI payment
annually, and creates issues with employee due to overwithholding resulting
in employee complaints and ill will towards HR, Payroll, and Enron. The
document depicts apparent options, and a potential solution, to the current
situation. This is viewed as an HR customer service issue to ensure Enron
employees receive the best overall service possible in their interface to the
HR function and systems.

It is my understanding that Enron Executive Management feel that employee
transferability among the BUs is important, and wishes to see more movement
of employees (as well as thoughts and ideas) between the BUs in the future to
enhance employee opportunities and Enron's value. This being the case, I
would expect the Enron cost and employee impacts and issues to be acerbated
as additional and increased employee movement occurs in the future.

We need Legal review of the issues and opportunities as presented in the
document to determine a solution to the current - and pending future -
situation, and look forward to any guidance you can provide in resolving the
problems the current situation creates for Enron employees who transfer
between Enron entities within a tax year and to mitigate potential future
issues.

If there is not a Legal obstacle, we will then go to Tax to address the
specific tax entity issues.

Regards,

Bob