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Comment by paxys | Hacker News Reader

The article title is mixing up two different problems, and I think that's what is causing all the confusion in this thread.

1. Stripe has to pay $3.5B in taxes. This is unrelated to employee stock.

2. Lots of long term employees have expiring options, and if they exercised them they would face a massive tax bill.

To solve both 1 & 2 Strips is doing an additional raise of $2.3B from private investors which will (1) give them money to pay that tax this quarter and (2) let employees exercise their options and sell shares to the same investors ($600M worth) – so basically a buyback event.

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Stripe is saying that the taxes are not for normal business operations, so I believe in this case #1 is actually related to problem #2.

yes, also Stripe will need to offer employees some relief (buying them out due to lack of liquid mkt mostly) which compounds to their expenses for the tax bill

I'm not sure your comment helps in clearing up the confusion.

> 1. Stripe has to pay $3.5B in taxes. This is unrelated to employee stock.

According to the company that $3.5b withholding tax ($2.3b this quarter, $500m in Q2-Q4, $700m next year) is very much related to RSUs.

> 2. Lots of long term employees have expiring options, and if they exercised them they would face a massive tax bill.

They = the employees, right? But they also have massive gains, which they then could use to pay these taxes. What’s the problem, except that tax payments aren’t deferred into the future?

Stripe doesn't want employees to sell stock to random third parties. This forces them to sell to a single buyer.

The shares are liquid and they are unable to sell, hence they don't have the cash to pay the tax

Isn't ordinary tax a "luxury" problem, as it's just a ratio of gains, so shouldn't be a surprise or a problem in the first place?

Problem #1 is not ordinary tax. It's indeed about employee's stock compensation and the withholding tax that the company sends to the IRS on behalf of the employees when giving the (net) amount of shares to them. The problem is that there is no market for those shares.

raising money only just to pay people's tax from people who want to cash out seems scammy

Letting the RSUs expire is even more scammy.

Who is being scammed?

It not people who want to cash out. Actually it’s people who can’t cash out otherwise, but will still have a huge tax bill if they exercise before the options expire. The only other choice for these employees would be to simply allow millions of Dollars (each) of options to expire.

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