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No FICA or FUTA on Statutory Stock Options |
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The IRS has published Notice 2002-47, Application of Employment Taxes to Statutory Stock Options.
This notice provides that until Treasury and the IRS issue further guidance, in the case of a statutory stock option, for example, an incentive stock option or an option granted under an employee stock purchase plan, the Service will not assess FICA tax or FUTA tax, or apply federal income tax withholding obligations, upon either the exercise of the option or the disposition of the stock acquired by an employee pursuant to the exercise of the option.
This notice also says that the Treasury and IRS anticipate that any final guidance that would apply employment taxes to statutory stock options will not apply to any exercise of a statutory stock option that occurs before January 1 of the year that follows the second anniversary of the publication of the final guidance.
This notice does not relieve individual taxpayers of the obligation to include compensation in income upon a disposition of stock acquired pursuant to the exercise of a statutory stock option and does not relieve employers of any of their reporting obligations.
For more detail, please go to the following link: http://www.irs.gov/pub/irs-drop/n-02-47.pdf |
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