Large companies doing business in San Francisco may soon be subject to an additional tax if voters approve the so-called âOverpaid Executive Gross Receipts Taxâ this coming November. Joining a minority of municipal governments that have imposed an âexecutive pay ratio taxâ on the heels of the SECâs CEO pay ratio disclosure rules, the San Francisco Board of Supervisors recently approved a ballot initiative for this Novemberâs election that calls for the imposition of a…
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 (âRSUsâ) and stock appreciation rights (âSARsâ) and (2) shortens the waiverâs deposit period by one day to align with current SEC securities open-market transaction settlement rules. The internal…
For an update on this development, see our July 15, 2020 post here. 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 (âRSUsâ) 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…
Sweden has not been a country previously featured in this blog, but we have become aware that the Swedish Tax Agency (the “STA”) has contacted several local employers in recent months to seek clarification on the amounts withheld in relation to equity award income and correct the reporting where needed. We believe it is possible that many more companies could be audited with respect to their equity award tax withholding practices in 2019 and beyond.…
The Tenth Circuit has affirmed the district courtâs dismissal of a plaintiff shareholderâs claim that withholding shares to satisfy taxes on a restricted stock unit (RSU) violated Exchange Act Section 16(b) (see Olagues v. Muncrief, No. 18-5018 (10th Cir. 2019)). As we outlined last year in a blog on the lower courtâs decision, the plaintiffâs claim was based on the non-exempt acquisition of shares by two executives within six months of the date that shares…
On December 7th, the IRS issued Notice 2018-97 to provide initial guidance on the new private company income inclusion deferral regime enacted under Code Section 83(i) as part of the 2017 Tax Cuts and Jobs Act (âSection 83(i)â). Under the deferral regime, eligible employees of eligible privately-held companies may elect to defer payment of federal income taxes due on exercise of stock options or settlement of restricted stock units (âRSUsâ) for up to five years…
Now that we have had a couple of weeks to digest the IRSâs guidance in Notice 2018-68 on the Tax Cuts and Jobs Actâs (TCJAâs) amendments to Code Section 162(m), itâs a good time to take a closer look at the âgrandfatheringâ rule. As a reminder, the TCJA (i) eliminated the âperformance-based compensationâ exception to Section 162(m)âs $1 million limit on the deductibility of covered employee compensation, (ii) expanded and made permanent the group of…
In a Private Letter Ruling released on August 17, 2018 (PLR 201833012) (âRulingâ), the IRS approved an employerâs proposed amendment to its 401(k) plan (âPlanâ), under which it would make an employer non-elective contribution on behalf of an employee conditioned on the employee making student loan repayments (âSLR non-elective contributionâ). As described in the Ruling, the proposed student loan repayment benefit program (the âprogramâ), is a voluntary program under which the employee must elect to…
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 (âTCJAâ), 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…
After discussing the issues for a tax deduction for share-based awards in Israel in my last blog, I wanted to revisit another tax deduction conundrum, this time in Canada. In the past, the Canada Revenue Agency (CRA) generally has not allowed a local tax deduction for the cost of share-settled awards (other than under very narrow circumstances). However, based on a technical interpretation released on April 12, 2017, the CRA updated its position such that…