ESPPs - 423, 6039 and Global Employees: A Practical Review

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With many options still underwater, we are seeing a resurgence of ESPPs, most likely because ESPPs provide a guaranteed benefit to employees and are viewed favorably by shareholders. However, in light of the new regulations to Section 423 and Section 6039, companies need to review their plans and their administrative processes to ensure compliance with the new rules. This presentation gives an overview of the new regs and provide guidance on what changes may need to be made to the plan document. In particular, how the new 423 regs will affect ESPPs offered to employees outside the U.S. and how, in certain circumstances, such offerings can jeopardize the Section 423 status of the ESPP. Solutions will be provided on how to avoid such a disqualification and ensure compliance with local law. Finally, we will detail the new requirements for employee information statements and discuss the IRS returns which will be due for the first time in early 2011 for ESPP transactions made in 2010.