Following the recent release of a standardized form for Section 83(b) elections (Form 15620), the Internal Revenue Service (IRS) will allow service providers to file their Section 83(b) elections online.
Section 83(b) of the Internal Revenue Code permits taxpayers to elect to include in their gross income the fair market value of unvested property (typically shares of restricted stock) over any amount paid for the property at the time of transfer, rather than at the time of vesting. For additional information on Section 83(b) elections and Form 15620, see our previous advisory.
Historically, service providers had to mail a physical copy of their Section 83(b) elections to the appropriate IRS office within 30 days of the transfer. In a much-anticipated move, the IRS now allows Form 15620 to be completed and filed online through its website.
Taxpayers may continue to file their Section 83(b) elections via physical mail or by using a nonstandardized form (although the IRS has indicated that online submission is the preferred method). Once the form is filed online, taxpayers can download a copy of Form 15620, which must be provided to the company that issued the restricted stock to them.
While this is a positive development, we do not expect a major shift in how Section 83(b) elections are filed in the context of private equity investments, since self-drafted election forms remain important to address unique circumstances.
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