California nonresident board members of companies based in California may soon be subject to income tax in California, regardless of whether they perform services within the state, if a newly proposed tax regulation is adopted. The proposed regulation — new section 17951-8 of Title 18 of the California Code of Regulations — released by the Franchise Tax Board of California on September 24, 2020, treats the compensation of a California nonresident, non-employee director of a…
In a Private Letter Ruling released on August 17, 2018 (PLR 201833012) (“Ruling”), the IRS approved an employer’s proposed amendment to its 401(k) plan (“Plan”), under which it would make an employer non-elective contribution on behalf of an employee conditioned on the employee making student loan repayments (“SLR non-elective contribution”). As described in the Ruling, the proposed student loan repayment benefit program (the “program”), is a voluntary program under which the employee must elect to…
On June 1, 2017, the United States Court of Appeals for the Fifth Circuit, in Langley v. Howard Hughes Mgmt. Co., L.L.C., 694 F. App’x 227 (5th Cir. 2017), held that William Langley, a former golf club executive, was entitled to receive approximately $255,000 in severance pay, plus attorney’s fees. The Court found that the administrator’s interpretation of a severance plan, which resulted in denying the former executive’s claim for severance pay, was an abuse…
Employees today are increasingly mobile and companies that grant equity or have deferred compensation programs are faced with complex withholding and reporting requirements in the various states. Employees who move between states before a taxable event occurs with respect to their equity or deferred compensation are often subject to tax in both their state of residence and states where they provided services, but no longer reside (i.e., states where they are considered a nonresident). States…