The NASPP Blog

More Information on Forms 3921 and 3922
Last week I blogged about the general instructions for Forms 3921 and 3922, which will be used to report ISO and ESPP transactions to the IRS beginning in 2011 (for 2010 transactions). This week I discuss some of the details relating to these forms. (This information is also from the general instructions to the forms.)

Penalties

The penalties for late filings are as follows:

• $15 per form if you file within 30 days of the deadline (maximum of $75,000 per year)
• $30 per form if you file by August 1 (maximum of $150,000 per year)
• $50 per form if you file after August 1 or never complete the filing (maximum of $250,000 per year)
• At least $100 per form if the late filing or failure to file is due to intentional disregard (no annual maximum). It could be very expensive to intentionally disregard these filings.

In addition, if you fail to distribute the employee statements, you can be subject to an additional penalty of $50 per statement (maximum of $100,000 per year). The same penalty for intentional disregard applies–so if you intentionally disregard both filing the return and distributing the employee statement, then the minimum penalty is $200 per transaction with no maximum.

Corrections

If you make a mistake in a filing, you will correct it by re-filing the form with all of the same information (except, of course, with the error corrected) and selecting the “Corrected” checkbox on the form. This is the same process used to correct errors on Form 1099.

Corrections are subject to the same deadline and penalties for late filings as the original form. There is an de minimus exemption for corrections, however: no penalties if the corrections you file are fewer than 1% of the total number of returns you filed (or less than ten, if you filed less than 1,000 returns). To be eligible for the de minimus exemption, you have to file the original return on time and you have to file the correction by August 1.

If you have less than 250 corrections, you can file them on paper, even if you were required to file the original forms electronically. Just like with the original filings, you can always file the corrections electronically on a voluntary basis. But you don’t get anything special if you do. (Not even the gratitude of some poor grunt at the IRS that would otherwise have to enter your paper form into the database because that grunt doesn’t exist. All the paper forms are scanned into the system–that’s why you have to write very, very neatly.)

Combined Reporting for Acquirers/Targets

When a company acquires another company, the acquirer can agree to assume the target’s reporting obligations for the year with respect to Forms 3921 and 3922. If the acquirer doesn’t agree to assume the target’s obligations, then the target is still required to file the returns with the IRS and distribute the statements to the employees. This might be hard for the target to do, since it won’t exist anymore or have any staff, so it’s probably smart to discuss this at the time of the merger.

No Truncation of Employee IDs

The employee ID number that must be included in the form filed with the IRS and the statement provided to employees is the employee’s Social Security Number. You cannot truncate or mask this number on either the form filed with the IRS or the employee statement. The IRS has a pilot program allowing truncation on employee statements for Forms 1098,1099, and 5498, but unfortunately Forms 3921 and 3922 aren’t included in this program. Hopefully the pilot will be successful and the program will be expanded.

No Logos

You cannot include any company logos on the forms filed with the IRS or the statements distributed to employees.  My guess is that the statements you currently distribute to employees include your logo; removing the logo is just one of the many changes you’ll need to make to the statements for 2011.

Last Chance for NASPP Conference Early Bird Discount–I Mean It!
This week is your very last chance to save $200 on your NASPP member registration for the 18th Annual NASPP Conference.  Get your registration in now, because the discount won’t be available after this Friday, May 14. 

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. 

• Register for the 18th Annual NASPP Conference–don’t wait; the early-bird discount is only available until this Friday, May 14.
• Complete the Compliance-O-Meter quiz on Excel Skills.
• Renew your NASPP membership for 2010 (if you aren’t an NASPP member, join today).
• It’s a big week for local NASPP chapter meetings!  Attend chapter meetings in DC, NY/NJ, Phoenix, Sacramento, San Francisco, and Seattle.  I’ll be at the San Francisco meeting; I hope to see you there.

– Barbara