The NASPP Blog

Today I am really looking attending the NASPP’s Silicon Valley Chapter All-Day in Santa Clara. If you are joining us, be sure and say hello to me! If you are missing out on the action today, don’t let your opportunity for the 19th Annual NASPP Conference early bird rates also slip through your fingers. Tomorrow is your last chance to get in on the special discount on registration.

Six Years of Savings

San Francisco did end up approving short-term relief from city tax on equity compensation through December 2017. But, there are a couple catches. First, the exemption from the city’s 1.5% payroll expense tax on stock options only applies to companies immediately following an IPO. Second, the relief only kicks in after the $750,000 in taxes has been paid. According to this article from the San Francisco Examiner, only a dozen or so companies are poised to actually be impacted by this tax break. Still, there is talk about what changes to city taxes might be proposed for the 2012 ballot. So, for now, public companies in San Francisco must still pay the payroll expense tax on equity compensation–unless they are eligible for other payroll tax exemptions.

You Can Run, but You Can’t Hide

Speaking of paying taxes, I also caught this article from CFO.com. We’ve been hearing that both the IRS and states are and will continue to focus on taxes due on equity compensation. This article indicates that states may be looking specifically at domestically mobile employees and several will soon be enacting legislation to provide specific formulas for calculating the portion of income deemed to be earned in-state.
This is both good news and bad news. Obviously, there is the administrative burden of achieving compliance with respect to mobile employees. If states are taking a closer look at the sourcing of income from equity compensation, companies need to be moving faster toward full compliance. The good news is that one of the hurdles to achieving real compliance is defining exactly what compliance means in certain jurisdictions and it looks like more states will be making that clear. The problem does still remain, however, that states are not legislating the same formula–an issue also present in global mobility compliance. Our expert panelists covered all the complexities of domestic mobility in the recent NASPP webcast, State Mobility: Don’t Be Grounded by Your Mobile Employees. If you weren’t able to join in the live webcast, the transcript and materials are both available for review.

Tax Planning

If you are looking for more information on taxes and equity compensation, the NASPP Conference has several great sessions. One I’m particularly looking forward to is: Death, Taxes and Senior Executives: Estate Planning and Retirement Programs.

-Rachel