“Eligible Person” shall mean a person who undertakes an initial public offering on a public stock exchange, or experiences a change in control prior to any such initial public offering, during the period this exclusion is in effect.
“Stock-Based Compensation” includes all incentive and non-statutory stock options granted prior to the date a person makes an initial public offering or undergoes a change in control including all underlying stock relating to such options, restricted stock, restricted stock units, and stock acquired as a result of employee stock purchase plans.
An Eligible Person may exclude from its Payroll Expense, as defined in Section 902.1, compensation related to Stock-Based Compensation for the tax years 2011 through 2017.
The amount of Payroll Expense attributable to Stock-Based Compensation that a person may exclude on an annual basis from its Payroll Expense is calculated as follows:
A person who, in tax year 2010, paid more than $750,000 in Payroll Expense Tax attributable to Stock-Based Compensation may exclude Payroll Expense attributable to Stock-Based Compensation in excess of that paid in tax year 2010;
A person who, in tax year 2010, did not pay more than $750,000 in Payroll Expense Tax attributable to Stock-Based Compensation may exclude Payroll Expense attributable to Stock-Based Compensation in excess of $750,000.
In order to be eligible for the Payroll Expense Tax exclusion authorized under this Section, persons wishing to claim the exclusion must:
File with the Tax Collector, on a form prescribed by the Tax Collector, an affidavit attesting to the facts establishing entitlement to the tax exclusion. The affidavit shall be supported by such other documentation as the Tax Collector shall prescribe.
Maintain records and documents in a manner acceptable to the Tax Collector. Such records and documents must objectively substantiate any exclusion claimed under this Section and be provided to the Tax Collector upon request.
File an annual payroll expense tax return with the Tax Collector regardless of the amount of tax liability shown on the return after claiming the exclusion provided for in this Section.
A person may not use or claim any unused portion of the exclusion available under this Section after the expiration date of this Section.
The Office of the Treasurer and Tax Collector may adopt rules and regulations regarding the exclusion provided under this Section.
The Tax Collector shall verify that any exclusion claimed pursuant to this Section is appropriate.
A misrepresentation or misstatement by any person regarding eligibility for the exclusion authorized by this Section that results in the underpayment or underreporting of the Payroll Expense Tax shall be subject to penalties.
The Stock-Based Compensation Exclusion in this Section may not be claimed concurrently with any other Payroll Expense Tax exclusion.
The Tax Collector shall submit an annual report to the Board of Supervisors for each year for which the exclusion authorized under this Section is available that sets forth aggregate information on the dollar value of the exclusions taken each year, and the number of persons claiming the exclusion.
Not later than six months prior to the expiration of this ordinance, the Controller shall perform an assessment and review of the effect of the Stock-Based Compensation Exclusion under this Section. Based on such assessment and review, the Controller shall prepare and submit an analysis to the Board of Supervisors. The analysis shall be based on criteria deemed relevant by the Controller, and may include but is not limited to, data contained in the annual report to the Board of Supervisors as required by subsection (j). In its analysis, the Controller shall recommend to the Board of Supervisors whether the exclusion should be extended for an additional period.
This Section 906.4 shall expire by operation of law on December 31, 2017, unless extended by the Board of Supervisors or the voters, and the City Attorney shall cause it to be removed from future editions of the Business and Tax Regulations Code.
(Added by Ord. 87-11, File No. 110337, App. 6/3/2011, Eff. 7/3/2011)