The tax law will keep changing as the year progresses. One important change so far is the addition of IRS Form 15620, which will make 83(b) election filing easier. Early-stage workers, business entrepreneurs, and those negotiating equity pay may be impacted by this development.

What is an 83(b) Election?

A Section 83(b) election is a tax decision that permits recipients of vesting equity to pay taxes on the equity’s value at the time of grant rather than at the time of vest. Filing this election with the IRS within 30 days after receiving the equity can save a substantial amount of tax by locking in a lower valuation for tax purposes. This option is especially advantageous in situations where there is an anticipated increase in the equity’s value.

The New IRS Form 15620: Key Changes

IRS Form 15620 provides a formal method of filing 83(b) elections. The highlights are as follows:

1. Standardized Reporting:

• • A standardized structure reduces errors and guarantees compliance with reporting regulations.
  • The new form contains sections for stock information, valuation, and election-related risk recognition.

2. Digital Filing Option:

• • To expedite the procedure and cut down on delays, taxpayers can submit the form electronically.
  • Although paper filing is still an option.

3. Acknowledgment of Tax Risks:

• • The new form requires taxpayers to attest to the understanding of the risks of electing, which include share suspension and/or post-election stock value declines.

4. Employer Notification Requirements:

• • The new form ensures transparency and compliance by including a section for employer acknowledgment, whereas earlier requirements required employees to notify their employers.

What Happens If You Miss the Deadline?

There may be significant tax consequences if an 83(b) election is not timely filed. Without the election, you may be subject to a higher tax rate on the value of the equity at vesting, and utilization of lower long-term capital gains rates is not available.

Best Practices for Filing Form 15620

1. Act Quickly:
   • To file by the 30-day limit, begin the filing process as soon as you receive your stock grant if you wish to elect section 83(b).
2. Consult Professionals:
   • To minimize mistakes and maximize tax results, consult with a tax expert or lawyer who specializes in equity compensation.
3. Document Everything:
   • To support your filing, keep thorough records of your stock award, valuation, and all correspondence pertaining to it.
4. Understand the Risks:
   • Consider the possible drawbacks before deciding to elect, such as the tax obligation on shares that are later sacrificed.

Conclusion
The introduction of IRS Form 15620 in 2025 represents a major advancement in the filing of 83(b) elections, providing taxpayers with convenience and clarity. Understanding the procedure and any possible repercussions is crucial, as with any tax-related decision. To make sure your filings are accurate and helpful, start the year off right by speaking with legal and financial experts. For individualized support, Strategy Law has knowledgeable tax planning and equity compensation attorneys.

This blog is written as of February 2025.  Recommendations and legal requirements are changing rapidly, so please continue to review our legal updates or review postings on relevant government websites.

All blogs on this site are for educational purposes only, do not constitute legal advice or opinion, and should not be applied to your situation, or any specific situation, without consultation with counsel. Strategy Law, LLP does not provide any legal advice concerning any matter discussed in a blog except upon formal engagement including, without limitation, execution of Strategy Law, LLP’s formal legal services agreement, and with respect to specific factual situations.  No blog constitutes a guaranty, warranty, or prediction regarding the result of any legal matter discussed in the blog or any representation.