On November 7, 2024, the IRS introduced Form 15620, a new standardized form for taxpayers opting to make a Section 83(b) election. Previously, taxpayers needed to send a letter to the IRS with the required information to make the Section 83(b) election effective.
When a taxpayer receives restricted property (usually in the form of stock or a partnership interest) in connection with the performance of service (e.g., as an employee), they are generally required to include the fair market value of the property as income in the year that the property vests. However, by filing a Section 83(b) election, the taxpayer can choose to accelerate the income inclusion to the grant date rather than the vesting date, which may be beneficial if the taxpayer expects the property to appreciate significantly in value between these dates. Section 83(b) elections are commonly made for equity grants to employees in start-up companies where the company’s value at the grant date is usually low.
In order for a Section 83(b) election to be effective, the Form 15620 needs to be filed with the IRS within 30 days after the date the property is transferred. Late filings are ineffective and there is currently no approved correction method. Taxpayers should also provide a copy of Form 15620 to their employer for record-keeping.
Currently, the Form 15620 will need to be mailed to the IRS office where the taxpayer files their federal income tax return. However, we expect that the IRS will eventually allow for the new form to be filed electronically.