Discover how the new IRS Form 15620 impacts your 83(b) election process and filing requirements.
On November 7, 2024, the IRS unveiled Form 15620, an official form that allows taxpayers to make elections under IRC Section 83(b). This form replaces the model letter previously outlined in Rev. Proc. 2012-29. It is still unclear whether the IRS will require taxpayers to exclusively use this new form or if the old letter method will remain valid. Currently, Form 15620 must be submitted via mail to the IRS, although the possibility of electronic filing in the future remains.
Key Details of 83(b) Elections
- Purpose: This election enables taxpayers to accelerate the taxation of property received for services that has not yet fully vested, potentially reducing future tax liabilities.
- Deadline: The election must be submitted within 30 days of the property transfer to be considered valid.
- Irrevocability: Once submitted, the election cannot be undone, and taxes paid are not refundable if the property’s value declines or if it is forfeited.
- Strategic Benefit: Making this election allows for the appreciation of the property to be taxed as capital gains instead of ordinary income.
Filing Procedure
- Submit Form 15620 (or a written statement) to the IRS office where you file your federal tax returns.
- Provide a copy of the election to the service provider so they can adjust their deductions accordingly.
- Keep proof of filing on time and retain copies of the submission for reference until the statute of limitations expires.
The introduction of Form 15620 is aimed at streamlining the 83(b) election process, but taxpayers should carefully consider the deadlines and potential tax implications before filing.
This blog post has been sourced from BDO.
