Many employers offer some form of stock-based compensation to employees. In AM-2020-004[1] the IRS has issued guidance related to the computation of payroll and withholding taxes on certain types of such compensation, as well as the timing of payroll tax deposits related to such compensation.

The guidance deals with three different programs:

• Nonqualified stock options

• Stock-settled stock appreciation rights (SARs)

• Stock-settled restricted stock unit (RSU)

In the summer of 2015 the IRS published proposed regulations (REG-135524-14) that were to remove the requirement at attach a copy of a §83(b) election with the service provider’s return.  The IRS has now issued those regulations in final form (TD 9779).  The regulations modify Reg. §1.83-2(c) to remove the requirement that a copy of the election be submitted with the service provider’s tax return for the year in question.

The proposed regulations had provided that taxpayers may elect to rely on these regulations for any property transferred on or after January 1, 2015 pending the issuance of final regulations.