The NASPP Blog

May 4, 2010

Forms 3921 and 3922

In our January webcast on the new regulations for filing Section 6039 returns for ISOs and ESPPs, Thomas Scholz of the IRS said that he expected the forms to be available by April. Since it’s now May, presumably the forms will be available soon. In the meantime, however, the general instructions to the forms have been updated.

Forms 3921 and 3922
Beginning for transactions in 2010, companies will have to file information returns with the IRS for ISO and ESPP transactions. The returns will be filed on Form 3921 for ISOs and Form 3922 for ESPPs. The general instructions include the deadlines for filing the forms, filing procedures, how to file corrections, information on distributing the employee statements, penalties, and other general information.

In addition to filing the returns with the IRS, companies are required to provide an information statement to employees.

Deadlines

As expected, the deadlines to file Forms 3921 and 3922 with the IRS are February 28 for paper filers and March 31 for electronic filers.

The deadline for distributing the statements to employees is still January 31. Even if you file the returns with the IRS electronically, you will probably still distribute the statements to employees in paper format because the requirements to distribute the statements in electronic format are so onerous. See the general instructions to the forms for a summary of these requirements.

Electronic Filing

You are required to file Forms 3921 and 3922 electronically if you have 250 or more returns to file with the IRS. This is a per-form requirement. So if you have 251 Forms 3921 to file and only 249 Forms 3922, then you only have to file the Forms 3921 electronically. Likewise, if you have 249 of each to file, then you don’t have to file any of the forms electronically. But you can always file electronically on a voluntary basis. Whether you are required to file electronically or do so on a voluntary basis, either way, you still benefit from the extended deadline, which gives you a whole extra month to get your act together on this. That would motivate me to file electronically.

Instructions for preparing the data files that must be submitted for electronic filing are available in IRS Publication 1220, but don’t get too excited because this publication hasn’t been updated since July of last year, which was before the final Section 6039 regs were published. Thus, it isn’t current for Form 3922 because the final regs added a data element.

Hopefully one of your service providers will come through with a solution and you won’t actually need to read Publication 1220 yourself. Now is the time to start talking to your payroll providers; providers of filing support for Forms W-2, 1099, etc.; and your stock plan administration providers. IRS Publication 1582 includes a list of providers that assist with filing electronic returns, but this list was last posted to the IRS website in January, so it doesn’t indicate which providers can assist with Forms 3921 and 3922.

You can request a waiver from the requirement to file electronically by filing Form 8508. Well, you can’t right now because the waiver form doesn’t include Forms 3921 and 3922, but presumably the IRS will fix this by the end of the year. Hopefully you won’t need it anyway; it seems like it would be real pain to complete all the forms manually. Interestingly, if you do have to complete the forms manually, handwritten forms are acceptable, so long as you write very, very neatly.

Less Than Two Weeks to Save on NASPP Conference
We are offering a $200 discount on NASPP member registrations for the 18th Annual NASPP Conference that are received by May 14.  This is your last chance to save on the Conference–we won’t extend the deadline for this rate.

The Conference will be held from September 20-23 in Chicago.  Last year’s Conference sold out and we expect even more attendees this year.  

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