The NASPP Blog

July 14, 2009

Electronic Filing of Section 6039 Returns

We are one step closer to filing Section 6039 returns with the IRS. Internal Revenue Bulletin 2009-27 (July 6, 2009) includes Rev. Proc. 2009-30, which updates the instructions for electronic filing of certain returns (Forms 1099, 1098, W-2G, etc.) with the IRS for 2009. Included in the updates are instructions for electronically submitting Forms 3921 and 3922, the new returns required under Section 6039 for ISOs and ESPPs (see the NASPP alert “IRS Proposes Regs for ISO and ESPP Information Returns” for more information about the new returns).

The instructions include the specifications for the files that must be submitted electronically. Files are submitted in ASCII format (i.e., one long text file), so this is a description of what data goes where in the text string. While we still don’t know what the paper forms will look like or have final regs for the returns, we now have the information necessary to create the electronic submissions. As indicated in the instructions released earlier (see my Feb 17 blog entry, “General Instructions for Section 6039 Returns“), any company with 250 or more returns per form must submit the returns electronically. Companies with less than 250 returns per form are encouraged, but not required, to submit them electronically.

Filing Deadlines

The instructions provide that transactions subject to Section 6039 must be reported by the following dates in the subsequent calendar year:

  • Information statements to employees: By January 31 (no news here, we’ve been providing these statements for years now)
  • Returns filed with the IRS on paper: By February 28
  • Returns filed with the IRS electronically: By March 31

These deadlines conflict with the proposed regs that were issued last summer, which require the returns to be filed with the IRS by January 31 (the same date by which the information statements must be provided to employees). We assume that this is an oversight that will be corrected in the final regulations. Since the deadlines stated above are the same for most, if not all, other returns the company files with the IRS (Forms W-2, Forms 1099, etc.), it makes sense that they would also apply to the Section 6039 returns.

Vendors for Electronic Filing

If you are looking for a vendor to assist you with filing these returns, the instructions mention that IRS Publication 1582 includes a list of vendors that provide electronic filing services or software for information returns. The list doesn’t specify which vendors are planning to include Forms 3921 and 3922 in their services (and the list hasn’t been updated since July 2008, so none of the vendor listings mention these forms), but it is at least a starting point for your research.

Document Retention

The instructions require companies to retain copies of electronic filings (or be able to reconstruct them) for three years from the filing due date. Just something to add to your document retention policy.

Panic and Extensions

My last blog posting on this topic emphasized that there was no need to panic yet, but, now that we are just six months or so away from the deadline, it’s definitely time to start thinking about this, if not panicking.

Incidentally, companies can request a 30-day filing extension using Form 8809. There’s even a fill-in version of the form available on the IRS’s electronic filing website, http://fire.irs.gov (I can’t link to the form because I don’t have a logon for this website, but it’s likely that someone at your company, perhaps in your payroll group, has a logon). If you use the fill-in form to submit the request electronically, the 30-day extension is automatic–you don’t even have to give a reason for needing it.

You can request additional extensions, but those aren’t automatic, must be submitted in paper format, and require you to explain why you need the extension. I wonder if the absence of final regulations and paper forms 3921 and 3922 would be an adequate reason for an extension…

Thanks to Stephan Gerdes at Computershare for bringing this Internal Revenue Bulletin to my attention.

Quick Survey on Employee Communication Practices
While we’re on the topic of Section 6039, find out how many companies distribute information statements to employees electronically (spoiler: not very many) and trends in a whole host of other communication practices–from grant agreements to deferral elections–by taking our quick survey on employee communication practices. It’s only ten easy questions–I predict you can complete the whole thing in less than five minutes.

NASPP Conference Workshop of the Week
This week’s workshop is “The IRS and Treasury Speak: Hot Tax Topics and Updates.” Always one of the most popular sessions at the NASPP Conference, this panel includes representatives from the IRS and Treasury, along with former Treasury staffers, to bring you the latest news on all the past year’s tax developments.  It’s a great opportunity to hear about projects the IRS is currently working on–such as the Section 6039 returns–and to voice your own opinions on those projects.

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 blog. 

– Barbara