The NASPP Blog

February 17, 2009

General Instructions for Section 6039 Returns

You will recall, from the NASPP alert “IRS Proposes Regs for ISO and ESPP Information Returns,” that, last July, that the IRS proposed regulations on the Section 6039 returns companies are required to file with the Service for ISO and ESPP transactions. Those regulations indicated that the returns would be filed on Forms 3921 (for ISOs) and 3922 (for ESPPs) and that drafts of the forms were forthcoming. We seem to be one step closer to seeing those drafts–last week the IRS updated the general instructions for Form 1099 to also include Forms 3921 and 3922.

General Instructions to Forms 3921 and 3922
The update provides general instructions only. The IRS notes that the final regulations and separate instructions to Forms 3921 and 3922 are not yet available.

No Need to Panic
These general instructions are for the 2009 forms, which companies won’t be filing until 2010, so you don’t need to make these filings this year and there’s still plenty of time to prepare for them in time for next year.

Beginning with transactions in 2009, Forms 3921 and 3922 filed on paper will be due by March 1 of the following year (this is a change from the deadline stated in the proposed regs, which would have required the returns to be filed by January 31). The general instructions also allow for electronic filing; companies that use this filing method get even a little more time–until March 31, to file their returns. The deadline for the corresponding information statements that must be provided to employees is still January 31.

Electronic Filing Required for Some Companies
If you have more than 250 returns to file for either form, you must file that form electronically. I suspect this means that most of you will be filing electronically. Publication 1220 explains how to file returns electronically with the IRS, but I further suspect that most of you will outsource this function and hopefully won’t have to read this thrilling 130-page publication.

Companies with fewer than 250 returns to file can voluntarily file electronically (and still benefit from the extended deadline for electronic filers).

Companies can also request a waiver from the requirement to file electronically up to 45 days in advance of the deadline.

Electronic Statements to Employees
If you’ve been considering furnishing Section 6039 statements electronically to your employees, the general instructions contain a concise summary of the requirements you must comply with to do so. 

Another Service Provider to Add to Your Team
In researching this blog entry, I discovered that there are service providers that specialize in making IRS filings on your behalf and that they appear to already be gearing up to handle Form 3921 and 3922 filings (you probably already knew this, but I thought this was just something the payroll proviers did–I didn’t realize it was a specialized industry). The good news is that if your existing service providers can’t help with these filings, there may be others that specialize in IRS filings that can. The bad news is that you have one more service provider to manage (and pay).

If you are trying to estimate the resources you might need to make these filings yourself, the IRS estimates that it will take 11 minutes to complete Form 3921 (presumably for one transaction) and 12 minutes to complete Form 3922.

Kudos
Thanks to Barb Richley at E*TRADE Financial for bringing the updated instructions to my attention.

Reason #13 to Renew Your NASPP Membership:  The NASPP Bookstore
The NCEO has just released 2009 editions of most of their publications on stock compensation. Did you know that you can purchase NCEO publications at a discount through the NASPP Bookstore (did you even know we had a bookstore)? These are some excellent resources (I refer to my copies quite frequently) and your NASPP membership makes the NCEO’s prices even more affordable.

Early-Bird Rate Ends Friday for NASPP Online Course on M&A

The early-bird rate for the NASPP’s newest online educational program, Tackling Equity Compensation Issues Related to Mergers & Acquisitions, is only available until this Friday, February 20. At only $495, this course is a true bargain–and members that register by Friday qualify for yet another $100 off this price. We’ve already extended this deadline once; we won’t be able to extend it again.

NASPP “To Do” List

We have so much going on here at the NASPP that it can be hard to keep track of it all, so I keep an ongoing “to do” list for you here in my blogs. 

– Barbara