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kelnosHNSource author
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> I bet that lawyer will tell you (if this is in California) that you just need to send a letter …

> I bet that lawyer will tell you (if this is in California) that you just need to send a letter saying “cool guys, send the shares, I’ll worry about the taxes. I don’t consent to forfeiture.” Not sure about this. A random thing[0] I found says: "RSUs are considered supplemental income, and as such, the income you receive from them is subject to withholding taxes. The IRS requires a federal withholding rate of 22% for supplemental income up to $1 million, and 37% for income exceeding that amount." (It also links to the relevant IRS publication, but I am not interested in poring over it right now.) So I believe the employer is required to do that withholding. It does seem pretty sketchy that current employees have access to a sell-to-cover option, but former employees do not. This feels like the company trying to screw over former employees, since they don't care if a former employee gets mad at them. …

Original discussionAsk HN: Former employees' RSUs at risk after startup's IPO163 source comments · at import
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vessenesHN

I read down pretty far and did not see this basic advice: you need a lawyer. Hire a very good one: they are cheaper than poor lawyers by an order of magnitude. That lawyer will review your agreements, the state laws and the communications with the company and tell you where you’re at. You could all go in together for the lawyer btw if you have the same contract. I bet that lawyer will tell you (if this is in California) that you just need to send a letter saying “cool guys, send the shares, I’ll worry about the taxes. I don’t consent to forfeiture.” But, crucially, I am not a lawyer and I haven’t read your agreements. anyway I would not stress over this, but I would act quickly, don’t sign anything, don’t communicate with the company unt you’ve talked to the lawyer, and know that worst case you will be able to find a loan to bridge this. It may actually be a good candidate for a venture …

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ryanackleyHN

I think this illustrates perfectly why they should talk to a lawyer. I read through the link you posted. They don't mention anything about sec. 83(b) elections. It's a common strategy to avoid paying taxes until the RSU's are liquidated. I know about it because my current employer structured the RSU's this way. Every ESOP and RSU plan I've ever participated in has been slightly different. Your link focuses on a very specific set of circumstances.

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csomarHN

> So I believe the employer is required to do that withholding. Sure but the withholding is the responsibility of the employer. In this case, shouldn't the employer cover it and send the shares - xx%?

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vessenesHN

It’s a basic legal concept that you can’t just seize pay or any asset, but especially one worked for. So, you may be right that the employer must withhold — again no idea. That said, unless you’ve specifically agreed to seizure in the past, it would be very surprising if the company did not owe you the value of those RSUs, and perhaps the ongoing value of the stock depending on if they’d failed to deliver timely on request. Who owes the IRS? The Company, on behalf of the person. Who owes the company for paying? The person. Each of these are separate obligations. The company is trying to tie them together for convenience, and presumably to wash out some RSU liabilities at the same time.

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