Stock Options

[honua23]

What is the name of your state? California

I recently sold some stock options when my company got acquired and the brokerage firm took care of the taxes based on the information that the acquiring company provided to them. A few days ago, I received the email below? Can they make me pay this back to them even though it was their mistake and not mine?

Theresa,

A reconciliation of stock option exercise transactions and T payroll records indicates that the tax on your May 2007 stock exercise transaction(s) was under-withheld by $200.05. After researching the error, we determined that the required California SDI tax was not withheld from this exercise. As a result, the additional amount that should have been withheld was refunded to you as part of your net proceeds. Due to system limitations, Smith Barney was unable to withhold SDI Tax at the time of your exercise.

T is required to collect the additional taxes due on this transaction. Note that the cap for CA SDI withholding for CY2007 is $500.33.



In order to rectify this error, we must ask that you please send a personal check to T in the amount $200.05. T payroll would then post this payment of taxes to your year-to-date taxes withheld for 2007 W-2 reporting. Please make this out to T Networks and send it to:



T Networks

Attn:

1234 Villa Street

Mountain View, CA 94041



We apologize for any inconvenience this causes you. Should you have any questions please contact M&A Stock.



Sincerely,

M Stock Services

[tranquility]

You owe the tax, not them. Can they *force* you? No, probably not. They would just shift withholding to SDI at the end of the year and fire you now. That's what I'd do if someone gave any problem on something like this. Just because they made a mistake does not make them liable for the tax. If they had to pay at the end of the year because of the mistake, I bet they'd have a cause of action against you. Why cheese off your employer?

[abezon]

Originally Posted by honua23

What is the name of your state? California

T is required to collect the additional taxes due on this transaction. Note that the cap for CA SDI withholding for CY2007 is $500.33.

My only comment to tranq's answer is that you *may* not need to pay the entire amount. The max you are required to pay into CA SDI is $500.33 per year. If you've already paid in $400.00, you need only pay $100.33. If that is the case, call payroll directly & ask them to check your year to date withholding & confirm that you only need to pay in $100.33. Then pay it.

My guess is that your employer has to pay the CA SDI monthly, so not paying the money back promptly essentially forces your employer to loan you the money. This will not make employer happy.

Also, if you don't pay it, employer will likely just enter a one-time adjustment to your next paycheck.

[honua23]

Originally Posted by tranquility

You owe the tax, not them. Can they *force* you? No, probably not. They would just shift withholding to SDI at the end of the year and fire you now. That's what I'd do if someone gave any problem on something like this. Just because they made a mistake does not make them liable for the tax. If they had to pay at the end of the year because of the mistake, I bet they'd have a cause of action against you. Why cheese off your employer?

WOW, I just wanted a simple answer and didn't expect to get one so rude and insulting. I've never really sold stock options before and have not encountered this situation. I was told that the company already had paid for the CA SDI tax. The only reason I questioned this email I received is because there have been numerous amount of mistakes occurring since our company was acquired and we are not under the new company. Thanks for the advice.

[LdiJ]

Originally Posted by honua23

WOW, I just wanted a simple answer and didn't expect to get one so rude and insulting. I've never really sold stock options before and have not encountered this situation. I was told that the company already had paid for the CA SDI tax. The only reason I questioned this email I received is because there have been numerous amount of mistakes occurring since our company was acquired and we are not under the new company. Thanks for the advice.

Those answers were not rude or insulting.