Stock Options and State Income Taxes

Post on: 15 Апрель, 2015 No Comment

Avoid Costly Nexus and Apportionment Traps

Recording of a 90-minute webinar with Q&A

Conducted on Thursday, October 16, 2008

Description

Stock options and restricted shares are a popular employee incentive in the competitive U.S. marketplace. However, due to an increasingly mobile workforce, its all too easy for a company to unwittingly trigger costly state tax compliance and tax obligations in the process.

Many states aggressively enforce withholding requirements on out-of-state employers for workers who perform services within the state, yet state guidelines are generally fuzzy. Employers and their advisors must understand when withholding nexus arises and how to comply with various state standards.

In addition to the complexities of monitoring employee movement, understanding various state payroll laws, and applying them to equity-based compensation, employers may find that filing withholding taxes then exposes them to nexus inquiries for other types of state and local business tax.

Listen as our panel of experienced corporate tax advisors breaks down and clarifies the state tax implications of employee stock incentives including the specific risks your company faces.

Outline

Background On Equity Compensation And Its Taxation

Types of equity compensation

Stock options
Restricted stock and restricted stock units
Others

How options are taxed at the federal level, from grant date to exercise

How options are taxed at the state level, from grant date to exercise

Explanation of how states piggyback off feds

Specific examples of state approaches

Different state methodologies for taxation

Specific examples of states and methodologies

How Use Of Equity Compensation Can Trigger Nexus

Employee withholding

Explanation of how employer nexus is triggered

Specific examples

Telecommuting issues and challenges

Corporate income, franchise and sales tax exposures

Doing business vs. transacting business

Employee withholding creates a paper trail

Specific examples

Implications and issues related to corporate income apportionment

Payroll factor: General rules

Alternative methods or discretionary adjustments

Federal legislation of note

Example of New York State

Withholding rules

Audit guidelines

Work-at-home rule and other nuances

Administrative Challenges And Options

Examples of states

Trends in audit

Specific examples of states and audit practices

Policy issues companies need to examine

What companies and their tax staffs can do if employees have cash flow problems or file returns in multiple states

Background on HR, stock plan, relevant payroll systems

What tools are available, and relevant systems limitations

How to make these more sophisticated

How tax specialists can help in this effort

Challenges with employee movement

Creating internal mechanisms to track employee movements

How tax specialists can help in this effort

What companies are doing

Habit of monitoring only executives, and the dangers inherent

Situations in which execs move from low-tax to high-tax states

Are additional controls, documentation needed?

Potential SoX 404 implications

Are additional controls, documentation needed?

Benefits

The panel will prepare you to craft a strategy for:

Dealing with conflicting state standards on withholding obligations and withholding amounts when it comes to stock options.
Setting up a tracking system for the tax department to monitor the movement of highly compensated staff from state to state.
Managing the apportionment formulas in states where stock-based compensation creates problems for the company.
Preparing for potential state nexus inquiries for other business taxes.

Faculty

Marlene Zobayan. West Coast Practice Leader, Global Rewards

Deloitte & Touche, San Jose, Calif.

She has more than 15 years of international tax and benefits experience including U.S. and U.K. expatriate tax, compensation and benefits, and global equity experience. She speaks regularly on global stock plans and rewards issues.

Andy Gibson. Partner and National Practice Leader, Compensation and Benefits Group

BDO USA, Atlanta

He provides compensation, benefits and tax consulting services to public, private and tax-exempt entities. He sits on an AICPA steering committee on executive compensation and is Lead Partner in Atlanta for the firm’s ERISA Practice.