IRS issues new tax rulings.

• Position: National

The U.S. Treasury Department has released a new ruling saying employment taxes must be paid, and taxes withheld, on bonuses paid for signing an employment contract.

The Treasury and IRS said the ruling concerns cases involving signing bonuses paid to sports players or payments after union members ratify a new collective bargaining agreement.

A second ruling involves payments made in connection with the cancellation of an employment contract. This involves cases when an employment contract is canceled before its term expires and the worker receives a payment in lieu of the remaining period of employment.

In these cases, the...