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Section 6039 Filings Go Online?

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December 11, 2018 | Barbara Baksa

Section 6039 Filings Go Online?

The IRS has released “online fillable” (their phrase, not mine—see below) versions of both Forms 3921 and 3922. Here’s what you need to know about them.

Note: For companies that file Forms 3921 and 3922 electronically, nothing is changing. The forms and electronic filing process are still the same. No need to read this blog entry unless you want a little amusement at the expense of the IRS.

Background

These are the forms companies are required to file with the IRS for ISO exercises (Form 3921) and ESPP purchases (Form 3922, and technically, it’s the first transfer of legal title of ESPP shares that triggers the filing, but for most ESPPs, that is interpreted as the purchase). 

Online Fillable?

The phrase “online fillable” means something different to the IRS that it does for most of us. To me, it is a form on a website that I complete and when I am done, I click a Submit button, and move on with my life. To the IRS, it is a PDF version of a form with boxes that you can type in. You have to download it from the IRS website, fill it out, save it, print it, mail it to the IRS (yep, via snail mail), and then they scan it into their antiquated computer system.

Form 3921

Form 3921 is the form that it would be most helpful to have an online fillable version of. Most companies that offer ESPPs have enough transactions that they have to submit their Form 3922 filings electronically in bulk. But it’s not unusual for companies to have so few ISO exercises that it is not only permissible for them to file on paper but feasible as well. Some of you might be pretty excited to learn that there is now an online fillable version of Form 3921.

Well, hold up there, buckaroo—not so fast. Only copies B and C of Form 3921 are available in an online fillable format. Those are the copies that you give to the employee and retain for the company’s records. Copy A, which you file with the IRS, is not available in an online fillable format.

If you want to file Form 3921 in paper format, you still have to order the paper forms from the IRS, wait for them to arrive by mail, and complete them by hand or using your grandparents’ typewriter. It seems the IRS only makes an online fillable version of copy A of a form if they receive so few paper filings of copy A so as to make the online fillable form completely useless to most filers.

Form 3922

Copies A, B, and C of Form 3922 are available as online fillable forms. If you have few enough 3922 filings that you can file them on paper, you can download a PDF of the form from the IRS website, fill it out on your computer, print it and mail it to the IRS. When printing the forms, you need to comply with the following specifications:

  • Print the forms on 8 ½ by 11 paper, with the page scaling set to actual size (typically the “none” setting for page scaling in Adobe Reader).
  • Use high quality non-gloss black ink.
  • Use white chemical wood bond paper, or equivalent, 20 pound, plus or minus 5%. No optical brighteners may be added to the pulp or paper during manufacture.

For more information on these requirements, see IRS Publication 1179 (section 2.1.1). Also, don’t forget to include Form 1096 with the paper forms when you mail them to the IRS.

- Barbara

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