The Internal Revenue Service (“IRS”) released two informal updates to guidance on income inclusion timing, and withholding and deposit rules, for stock options and for stock-settled stock appreciation rights (“SARS”) and restricted stock units (“RSUs”).  First, the IRS released Generic Legal Advice Memorandum 2020-004 (the “GLAM”) on May 22, 2020, which outlines the views of the IRS Office of Chief Counsel with respect to the timing of income inclusion and the application of Federal Insurance Contribution Act (“FICA”) and Federal income tax (“FIT”) withholding and deposit obligations for three types of stock-settled equity awards.  Second, the IRS updated Section 20.1.4.26.2 of the Internal Review Manual (“IRM Update”) on May 26, 2020, to expand the categories of equity awards eligible for certain administrative relief from the penalties of the Next-Day Deposit Rule (described below), while slightly tightening the conditions for such relief.
Continue Reading IRS Updates Guidance on Timing of Wage and FICA Withholding for Stock Options and RSUs

FICA’s special timing rule for account balance plans is oft-misunderstood – and misapplied – which can lead to unfavorable consequences for employers and employees alike.  Partner Debbie Hoffman and senior associate Stephanie Vasconcellos recently revisited the rule, conducting an in-depth analysis for Bloomberg BNA’s Tax Management Compensation Planning Journal.  Access the full article at www.bna.com