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T+1 is Right Around the Corner – Time to Confirm Your Equity Award Tax Readiness

By and 5 Mins Read

The Securities and Exchange Commission (SEC) last year amended rules under the Securities Exchange Act of 1934 to shorten the securities transaction settlement cycle for most broker-dealer securities transactions, from “T+2” to “T+1,” meaning that securities transactions will need to be settled within one business day of the transaction date (“T”), effective as of May 28, 2024. Impact on Equity Awards The new SEC-required settlement timing will directly impact equity awards that are settled through…

Withholding Headaches in Sweden

By 7 Mins Read

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.…

New Dismissal of Section 16 Officer Share Withholding Case

By and 3 Mins Read

We have been following the progress of a number of plaintiff shareholder suits alleging Exchange Act Section 16(b) short swing profits based on “discretionary” share withholding on equity awards. Just under a year ago we were happy to report the first district court dismissal of one of these claims, although that case is currently on appeal to the Fifth Circuit. On January 26, 2018, a second such claim was thrown out via summary judgment, this…

IRS Publishes 2018 Withholding Guidance Including Supplemental Withholding Rates

By , , , and 3 Mins Read

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…

Foreign TIN and Date of Birth Required for Reduced Tax Withholding Rate in 2018

By 2 Mins Read

The IRS has issued guidance in Notice 2017-46 (the “Notice”) relaxing the rules applicable to U.S. financial institutions that require the collection of foreign taxpayer identification numbers (Foreign TINs) from U.S. nonresident aliens. Under anticipated amendments to temporary regulations that are described in the Notice, withholding agents will be required to collect a Foreign TIN and date of birth (in the case of an individual account holder) on a foreign person’s beneficial owner withholding certificate (e.g., a…