This Advisory is a reminder to our clients and friends that employers are required to provide employees (and former employees) with written reports regarding exercises of incentive stock options and transfers of stock purchased under employee stock purchase plans in 2013. The deadline for providing these reports is January 31, 2014. Employers are also required to file information returns with the IRS containing the same information as reported in the reports. The information returns are due by February 28, 2014 for hard copy filings and March 31, 2014 for electronic filings.
Employee Information Statements
Section 6039 of the Internal Revenue Code of 1986, as amended, requires employers to provide certain written information to employees and former employees by January 31, 2014, to assist such persons in preparing their 2013 tax returns.
First, an employer must provide to each employee (or former employee) who received stock issued upon exercise of an incentive stock option (ISO) during 2013, a written information statement containing the information required by IRS Form 3921 (http://www.irs.gov/pub/irs-pdf/f3921.pdf).
Section 6039 also requires an employer to provide to each employee (or former employee) who, in 2013, made his/her first transfer of stock acquired by such employee (or former employee) under an employee stock purchase plan1 (but only where the stock was acquired by the employee/former employee for a purchase price that was either less than 100% of the value of the stock on the grant date or that was not fixed or determinable on the grant date), a written information statement containing the information required by IRS Form 3922 (http://www.irs.gov/pub/irs-pdf/f3922.pdf).
These employee information statements must be provided by employers on or before January 31, 2014, and must be presented on the appropriate IRS form (Form 3921 for ISOs and Form 3922 for transfers of stock acquired under employee stock purchase plans) or an “acceptable substitute”2.
IRS Information Return
Employers must file information returns with the IRS containing the same information that they provided to employees (and former employees) under Section 6039. The information returns must be made on Forms 3921 and 3922. The IRS information returns are due by February 28, 2014 (if filed in hard copy), or by March 31, 2014 (if filed electronically). A 30-day filing extension is available automatically upon filing Form 8809. No similar extension is available for providing employee information statements.
Should you have any questions, please feel free to contact us.
1 See IRC Section 423.
2 Any substitute form must meet the IRS requirements in Publication 1179. The IRS warns that employers should not file a copy of either Form 3921 or 3922 that is downloaded from the IRS website, as such forms are not scannable. The IRS may impose penalties for filing non-scannable forms.