July 27, 2016
IRS Eliminates Requirement to File
Copy of 83(b) Election with Tax Return
In Treasury Decision 9779,
published in the July 26, 2016 Federal Register, the IRS amended Income Tax Regulations section 1.83-2(c)
to eliminate the requirement that taxpayers include copies of section 83(b) elections with their
federal income tax returns for the taxable year of the underlying property transfer.
- A service provider receiving property “in connection with the performance of services” and
“subject to a substantial risk of forfeiture“ still makes a section 83(b) election by filing a
statement with the internal revenue office with which he or she files his or her federal income
tax return no later than 30 days following the transfer of the property. In addition, copies
of a section 83(b) election must still be provided to the service recipient and to any transferee
of the property if other than the service provider.
- The requirement that copies of section 83(b) elections also be filed with service providers’ federal
income tax returns had often precluded the electronic filing of those returns. The IRS now routinely
scans and saves electronic copies of original 83(b) elections and accordingly no longer needs a copy
of the election to be included with tax returns.
- Elimination of the requirement that taxpayers include copies of 83(b) elections with their federal
income tax returns applies to transfers of property on or after January 1, 2016. However, as stated
in the earlier Notice of Proposed Rulemaking,
taxpayers can rely on elimination of this requirement for property transferred on or after
January 1, 2015.
- The IRS has revoked Revenue Procedure 2012–29, in part, to the extent it requires, inconsistent
with the amended regulations, a taxpayer to submit a copy of an 83(b) election with his or her federal
income tax return.
For further information please contact
Brian Wainwright (Palo Alto).
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