Total Articles: 13
Reminder Alert: Incentive Stock Options and Employee Stock Purchase Plans—IRS Information Statements and Information Returns under Section 6039
This Alert serves as a reminder of certain year-end reporting requirements imposed under Section 6039 of the Internal Revenue Code of 1986, as amended, with respect to incentive stock option exercises and transfers of stock acquired under employee stock purchase plans occurring during 2011.
IRS Launches New Voluntary Classification Settlement Program
The Internal Revenue Service (the “IRS”) recently announced the Voluntary Classification Settlement Program (“VCSP”), a new program available to businesses, tax-exempt organizations, and government entities that are erroneously treating workers as non-employees or independent contractors. The program provides employers the opportunity to voluntarily reclassify workers as employees with limited federal employment tax liability for past
non-employee treatment.
DOL Coordinates With IRS, States On Independent Contractor Misclassification
Earlier this week, the U.S. Department of Labor held a ceremony at which Secretary of Labor Hilda Solis signed a memorandum of understanding with the Internal Revenue Service to "improve departmental efforts to end the business practice of misclassifying employees in order to avoid providing employment protections." The DOL also signed or has agreed to sign memorandums of understanding with officials in 11 states to coordinate efforts to crack down on independent contractor misclassification, including Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah, and Washington.
Independent Contractors Are Again Front-And-Center
The U.S. Labor Department announced today that it has entered into a cooperative alliance with the U.S. Internal Revenue Service and others aimed at ending "the business practice of misclassifying employees [as independent contractors] in order to avoid providing employment protections." As the IRS's involvement might suggest, this collaboration has as much to do with enhancing the inflow of tax revenues and other sums to various governments as it does with "employee protections".
Once more into the breach (of contract), dear friends
It is a well-settled principle of contract law that if a party breaches a contract, it may later have trouble enforcing the provisions of that contract in court. Applying that principle, a recent opinion issued by the Third U.S. Circuit Court of Appeals (which includes Delaware) indicates that an employer's misclassification of an employee as an independent contractor may result in a breach of contract, which can later prevent enforcement of the contract's noncompetition provisions.
Incentive or Gift? How Perception of Employee Stock Options Affects Performance
The basic theory of why companies issue stock options to their employees is fairly simple: The more that a firm's stock price increases, the greater the profit from exercising those options, creating what employers hope is a valuable incentive that will motivate employees to focus on making the company more successful and more profitable.
Incentive Stock Options and Employee Stock Purchase PlansIRS Information Statements and Information Returns under the Section 6039 Final Regulations
This Alert serves as a reminder of certain year-end reporting requirements imposed with respect to incentive stock options and employee stock purchase plans and as a notification of changes in reporting requirements for incentive stock option exercises and transfers of stock acquired under employee stock purchase plans occurring on or after January 1, 2010.
Worker (Mis)classification Can Lead To Trouble.
Over the past year, federal and state governmental agencies have signaled their intent to more seriously investigate the misclassification of employees as independent contractors. For various reasons, employers often find it desirable to classify certain workers as independent contractors, but state and federal agencies often look at classification decisions very closely.
Special Reporting Requirements Regarding Incentive Stock Options and Employee Stock Purchase Plans -- Final Regulations Issued Under Section 6039
Section 6039 of the Internal Revenue Code of 1986, as amended (the "Code"), imposes reporting requirements on corporations with respect to the exercise of incentive stock options and the transfer of stock acquired under employee stock purchase plans.
IRS Issues Final Regulations for Employee Stock Purchase Plans.
An employee stock purchase plan ("ESPP") allows employees of corporations (typically publicly traded companies) to purchase company stock or stock of an affiliate at a discount with the potential for favorable tax treatment under Section 423 of the Internal Revenue Code ("Section 423") if certain conditions are met. Under an ESPP, eligible employees receive options to purchase company stock (usually at a discount) pursuant to an "offering." Employees typically participate in an ESPP by authorizing voluntary payroll deductions during an "offering period."
WORKER CLASSIFICATION: WILL THE IRS AND OTHERS AGREE WITH YOU? (pdf).
Employers often face a business decision about how to treat a particular worker or group
of workers: Are the individuals independent contractors or employees? Often, the independent
contractor classification is attractive to employers because it affords certain flexibility. However,
there are a number of factors that must be considered when deciding how to classify workers.
Employee Stock Forfeiture Provisions -- A Different Breed of Restrictive Covenant (pdf).
This article discusses forfeiture-for-competition provisions in employee stock incentive arrangements. The authors posit that they should not be treated as restraints on trade or subjected to a traditional restrictive covenant analysis.
How Employee Stock Options Can Undermine the Value of Ordinary Shares.
Tallying corporate profits has never been easy, but in the past few years its become even harder as the debate continues over how to count employee stock options.
