New IRS Reporting Applicable to Employers that Grant ISOs or Sponsor ESPPs

Prior to 2010 tax years, Section 6039 of the Internal Revenue Code, required that employers provide information statements to their employees when such employees either (i) exercised grants of incentive stock options (ISOs) or (ii) purchased shares under an employee stock purchase plan (ESPP).

For years 2010 and later, an updated set of rules and regulations requires employers to file information statements with the IRS, in addition to the information statements given to employees.  With 2010 reporting deadlines rapidly approaching, employers should make note of the following due dates:

January 31, 2011 – Form 3921 (ISO exercises) and Form 3922 (ESPP purchases) to be delivered to employees.
February 28, 2011 – Physical Forms 3921 and 3922 to be filed with the IRS (if less than 250 total to be filed).
March 31, 2011 – Electronic Forms 3921 and 3922 to be filed with the IRS (if more than 250 total to be filed).

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Roger Royse

Roger Royse, the founder of the Royse Law Firm, works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger regularly advises on complex tax structuring, high stakes business negotiations and large international financial transactions. Practicing business and tax law since 1984, Roger’s background includes work with prominent San Francisco Bay area law firms, as well as Milbank, Tweed, Hadley and McCloy in New York City.
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