On November 7, 2024, the U.S. Internal Revenue Service (the IRS) released Form 15620,1 which standardizes elections under section 83(b) of the Internal Revenue Code of 1986, as amended (the "Code," and such elections, "Section 83(b) Elections") for taxpayers to accelerate taxation upon the receipt of unvested property received in connection with the performance of services.
The IRS has historically required taxpayers to make a Section 83(b) Election by submitting a self-drafted letter that followed the guidelines outlined in IRS Revenue Procedure 2012-292 or section 1.83-2 of the Treasury regulations. This approach carried the risk of an invalid Section 83(b) Election due to the potential omission of required information. While taxpayers may still file Section 83(b) Elections using self-drafted letters, Form 15620, which now reduces the risk of errors, standardizes Section 83(b) Elections.
Taxpayers should be aware that Form 15620 does not modify the requirements in section 1.83-2 of the Treasury regulations for making Section 83(b) Elections, including the requirements that (i) the election be filed not later than 30 days after the date that the property that is the subject of the election was transferred and (ii) copies of the Section 83(b) Election (A) be sent via certified mail to the IRS office where the taxpayer files its tax return and (B) be provided to the person for whom the services are performed (as well as the transferee of such property if different than the service recipient).
While electronic filing of Form 15620 is expected in the future, taxpayers should be aware that it currently must be mailed.
Footnotes
1. Form 15620
2. IRS Revenue Procedure 2012-29
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
