A&M Helps U.S. Expats Navigate Complex Payroll Tax Issues in Exit Transactions
Alvarez & Marsal (A&M), a global professional services firm, offers expert assistance with U.S. payroll tax issues, particularly those related to exit transactions. Their tax compliance, risk assessment, and structuring services help optimize tax outcomes and ensure regulatory adherence.
A&M's tax team can help determine if section 280G applies, which imposes a 20% excise tax on certain deferred compensation arrangements, including share option awards. They also review stock option plans and ensure valid 83(b) elections have been made. An 83(b) election allows recipients of restricted shares to be taxed at the fair market value at the time of receipt, rather than when the shares vest, potentially saving them from higher ordinary income tax rates.
Private companies can mitigate section 280G impacts by obtaining shareholder approval for compensation payments. However, failure to make an 83(b) election can lead to taxation at ordinary income rates upon vesting, which can be higher than the capital gain rate. Additionally, golden parachute payments to senior employees in a change of control may incur an additional 20% tax.
U.S. citizens residing in the U.K. should be aware of potential tax liabilities due to three key issues: section 280G, the lack of an 83(b) election, and golden parachute payments. Seeking professional assistance, such as from A&M, can help navigate these complexities and optimize tax outcomes.
