Tax withholdings for stock compensation - comparing FASB and IRS rules

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August 2016

Overview

On March 30, 2016, the FASB issued Accounting Standards Update (‘ASU’) 2016-09, Improvements to Employee Share-Based Payment Accounting, which makes a number of changes meant to simplify and improve accounting for share-based payments. One important amendment relates to the threshold permitted on net settlements for tax withholding without triggering liability classification. As many employers are now considering withholding changes due to the new FASB rules, questions have arisen as to the permitted methods under IRS guidance. This Insight explores the IRS guidelines in this area.

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Kelley McLaughlin

US Tax Marketing Leader, PwC US

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