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Anne Batter

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In an apparent follow-up to its General Legal Advice Memorandum dated May 18, 2020 (GLAM 2020-004), the IRS has issued an internal procedural update that (1) extends the application of the administrative waiver of late employment tax deposit penalties for stock options to stock-settled restricted stock units (“RSUs”) and stock appreciation rights (“SARs”) and (2) shortens the waiver’s deposit period by one day to align with current SEC securities open-market transaction settlement rules. The internal…

The IRS has issued a General Legal Advice Memorandum (GLAM 2020-004) that could increase the audit risk and exposure for late deposit penalties for companies granting stock-settled restricted stock units (“RSUs”) and either (i) not making their next-day employment tax withholding deposits with the IRS within one day of when they request their transfer agent to transfer shares underlying the RSU award to the employee or (ii) not treating the fair market value of the…

On September 24, 2018, the IRS issued Notice 2018-71 (Notice) on the temporary employer tax credit introduced by the Tax Cuts and Jobs Act for wages paid to Qualifying Employees while on covered family or medical leave under new Section 45S of the Internal Revenue Code (Code). In brief: Where the requirements of the Notice are met, the new credit may be claimed during tax years 2018 and 2019 for paid family and medical leave…

Last week, the IRS issued Notice 2018-68 containing initial guidance on the amendments to section 162(m) made by the Tax Cuts and Jobs Act (“TCJA”), including the transitional relief for written binding contracts. On balance, the guidance is not particularly favorable to taxpayers, as it takes a narrow view of the grandfathering relief for arrangements in effect under prior law, particularly for arrangements with negative discretion, and a broad view of the new group of…

On January 11, 2018, the IRS issued Notice 1036, which provides the percentage method tables for income tax withholding in 2018. Key developments include: The flat withholding rate on supplemental wages, such as equity awards, of $1 million dollars and under a year is now 22% – down from 25%. As anticipated, the mandatory supplemental withholding rate for compensation in excess of $1 million is now 37% – down from 39.6%. The backup withholding rate…

As of December 20, 2017, both the House of Representatives and the Senate have voted to approve the final version of the Tax Cuts and Jobs Act, in substantially the form released by the Conference Committee on December 15th. The bill is expected to be presented to the President for signature before Christmas, making US tax reform a reality for 2018.

Under current law, taxpayers who hold multiple lots of the same shares can identify which shares are considered sold for purposes of calculating capital gains.  Section 13533 of the Senate tax bill would eliminate this flexibility and mandate a first-in, first out (FIFO) approach. This will adversely impact employees who have acquired low cost basis company shares in the past and continue to hold those shares. The obvious –  Following enactment,  employees will want to…

U.S. tax reform continues to move through the Halls of Congress at a brisk pace. Yesterday the House approved the bill proposed by the House Ways and Means Committee. For a discussion of the compensation-related provisions of the House bill, please refer to our alert dated November 13, 2017. The current draft of the conceptual mark-up under review by the Senate Finance Committee (the “Senate Mark”) has been amended in a way that generally aligns…

If you have been following the progress of U.S. tax reform, you will know that one of the most significant proposed changes in the compensation arena is currently up in the air, with a conflict between the final bill approved last week by the House Ways and Means Committee and the conceptual mark-up now under review by the Senate Finance Committee (the “Senate Mark”). Specifically, the final House bill eliminated proposed changes that would have…

We know we are not supposed to get too excited about a proposed tax bill, but The Tax Cuts and Jobs Act, the amended version of which was released by the House on November 3, 2017, is no ordinary tax bill. Not only does it propose sweeping changes to the taxation of executive compensation and employee benefits, it aims to be effective as of January 1, 2018 – which means limited time to mobilize against…