Withholding on Equity Awards: Mastering Complex New FASB ASC 718 Standard and IRS Requirements

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, March 30, 2017
Recorded event now available


This webinar will provide corporate tax professionals to U.S.-based multinational corporations that withhold on equity awards with a detailed, practical and thorough guide to answer questions regarding U.S. income tax withholding rules applicable to equity compensation and how FASB ASC 718 update impacts corporate tax management.

Description

A recent change in financial accounting standards (FASB ASC 718) results in questions regarding the U.S. income tax withholding rules applicable to equity compensation. The accounting standard update is generally effective 2017 for calendar year public companies.

Some employers are under the impression that employees can now simply request withholding on equity compensation at the highest marginal individual income tax rate, currently 39.6%. However, this is not as simple as it appears because detailed rules and regulations—and plan provisions—may limit withholding options.

The IRS takes the position that the only ways to withhold on supplemental wages of less than $1 million per year are the supplemental income withholding rates or the aggregate method. Employers and employees alike are wondering whether withholding on supplemental income at the statutory maximum income tax rate is possible. Outside of the mandatory withholding requirement of Reg. 31.3402(g)-1(a)(2) for supplemental wages over $1 million, a 39.6% withholding rate is not expressly permitted.

The Service has for many years strenuously objected to the use of any such informal “work around” to avoid the strictly applicable federal income tax withholding regimes.

Listen as the panel provides tax executives and professionals with practical guidance for businesses that want to withhold federal income tax at a rate higher than the minimum withholding rate through use of the aggregate method and Forms W-4. The panel will also review and explain the impact of plan and grant documents on federal income tax withholding on equity compensation.

Outline

  1. IRS equity compensation withholding rules
    1. Types of wages
    2. Overview of supplemental wages
    3. Permissible withholding methods
    4. Supplemental wage thresholds (<$1M, >1M)
    5. Form W-4
    6. State tax considerations
    7. Payroll practicalities
  2. FASB ASC 718 and impact on tax withholding
    1. Methods of withholding on equity awards
    2. ASC718 requirements for net share settlement
    3. Withholding changes under Notice ASU 2016-09
  3. Non-US watchpoints
  4. Plan terms and grant documents
    1. Plan term amendments
    2. Withholding of shares and materiality threshholds
    3. NYSE and Nasdaq on plan amendments
    4. ISS on plan amendments
    5. Communication with broker/administrator and employees

Benefits

The panel will review these and other key issues:

  • What are the changes that impact corporate tax management due to FASB ASC 718?
  • What are the detailed applicable withholding rules?
  • Supplemental wages and withholding employment taxes
  • What is the permissible method under IRS regs to withhold on supplemental wage exceeding $1 million?
  • What are the two permissible methods to withhold for supplemental wages below $1 million?

Learning Objectives

After completing this course, you will be able to:

  • Identify the types of wages subject to FASB ASC 718
  • Establish permissible methods of income tax withholding
  • Ascertain a permissible method of tax withholding
  • Discern the impact on tax reporting due to a use of a nonpermissible method

Faculty

Barbara Baksa, Executive Director
National Association of Stock Plan Professionals, Concord, Calif.

Ms. Baksa is a frequent speaker on equity compensation related topics, has authored numerous white papers and articles on stock compensation and has contributed chapters to four books on equity compensation. She is the author of the book Accounting for Equity Compensation, published by the National Center for Employee Ownership and a required text for the Certified Equity Professionals exam. She also serves as editor of The NASPP Advisor and co-editor of The Corporate Executive. She oversees all NASPP member programs and services, including the NASPP Annual Conference, online educational programs, webcasts on current developments, website content, surveys and research, regional chapters, and industry involvement. 

Marlene Zobayan, Partner
Rutlen Associates, Palo Alto, Calif.

Ms. Zobayan has over twenty years of international tax and benefits experience, including global equity plans, mobile employee taxation, global compensation and benefits. She provides a range of services to her clients, including global equity plan design, tax reviews and tax optimization, assistance with local approvals and filings, communications, and designing administrative processes. She is a regular speaker and author on global stock plan and rewards issues. Prior to joining Rutlen Associates, she was the practice leader on the West Coast for Deloitte Tax's Global Rewards group and managed their news alerts for global equity plan changes.


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Corporate Tax Advisory Board

David Adler

Director of Multistate Tax Services

Deloitte Tax

Silvia Aguirre

Principal

CertCapture

David Bowen

Principal

Grant Thornton

Elizabeth Bowman

Tax Research Analyst

ADP Tax Credit Services

Rick Bregitzer

Manager of Domestic Taxes

Parker–Hannifin

Joseph Calianno

Partner, National Tax Practice

Grant Thornton

Stephanie Anne Lipinski-Galland

Partner

Williams Mullen

John Garippa

Senior Partner

Garippa Lotz & Giannuario

Joseph Geiger, Esq., CPA

Tax Consultant

Vertex

Kenneth Graeber

VP & Management Consultant

Marvin F. Poer & Co.

Don Griswold

Tax Group Partner

Crowell & Moring

George Manousos

Partner

PricewaterhouseCoopers

Diane Matulich

Senior Manager, Local Taxes

Advanced Micro Devices

Betty McIntosh

Director, Location Incentives Group

Cushman & Wakefield

Foy Mitchell

Vice President

Marvin F. Poer & Co.

Walter Pickhardt

Partner

Faegre & Benson

Richard Pomp

Professor of Tax Law

University of Connecticut

Richard J. Prem

Vice President, Indirect Taxes & Tax Reporting

Amazon.com

Michael Press

Managing Principal

M.R. Press Consulting

Tammy Propst

President

taxadvantagegroup

Mark Semerad

Manager of Property Tax

Level 3 Communications

Richard Weiss

Tax Research Manager

ADP Tax Credit Services

Tom Windram

Managing Director & National Leader, Federal Tax Credits & Incentives

RSM McGladrey

Thomas Zaino

Managing Member

Zaino Hall & Farrin

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