Under this IRS rule, instead of paying the FICA
taxes on the vesting date when there is no longer a risk of forfeiture
, companies can wait to pay the FICA taxes (not the ordinary income tax) on a subsequent date in the same calendar year (e.g. the end of the year). The date that the company uses, on or after the grant vests up until the end of the year, will determine the value of the award for FICA purposes. For equity compensation, this rule becomes an issue mostly with restricted stock units that allow the deferral of share delivery, which delays the ordinary income tax, but not FICA, to a later year. For details, see the FAQ
in the section of this website on RSUs.