ISO spread income is "wages" for purposes of income tax withholding and credit for increasing research activities

Article Abstract:

A Tax Court Memorandum opinion found that spread income received as a result of disqualifying dispositions of stock received under an incentive stock option (ISO) plan would be considered wages for both withholding and research tax credit purposes. The Court applied the standards under IRC section 3401(a) to determine whether the gain from the sale of the stock should be considered an expense incurred by the employer to increase research activities. IRC section 41 provides tax credits for expenses incurred to increase research.

Taxation, Research and development tax credit, Incentive stock options

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Microsoft loses another round to misclassified employees

Article Abstract:

Microsoft workers and class action members were awarded partial summary judgment on the issue of their participation in Microsoft's employee benefit plans, including an IRC section 423 stock purchase plan. The US District Court of Western Washington in Vizcaino v. Microsoft Corp. found against Microsoft on its motion to amend class certification. The case is part of the long struggle of workers classified as independent contractors to be classified as employees for benefit purposes.

Tax Law, Public Finance Activities, Employee Benefits & Services, Cases, Microsoft Corp., Human resource management, MSFT, Employee benefits

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Independent contractor

Article Abstract:

Employer liability for withholding taxes hinges on the classification of workers as employees or independent contractors. The 'common law' test to determine this generally states that persons an employer has the authority to control and direct are classified as employees. The IRS also has detailed tests for determining worker classification and penalties for recharacterization. These penalties include back taxes and interest against employers.

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