Employers must furnish information statements to their employees to report exercises of incentive stock options ("ISOs") and transfers of stock under employee stock purchase plans ("ESPPs") that occurred during 2011 by January 31, 2012. Employers also must remit this information to the government by February 28, 2012 (or by March 31, 2012 if filing electronically).
Forms 3921 and 3922
If ISO's, as defined under Internal Revenue Code Section 422, were exercised, employers must deliver an information statement on IRS Form 3921 to all employees (excluding nonresident aliens) who have exercised their options in 2011 calendar year.
For ESPP's, as defined under Internal Revenue Code Section 423, the information statement should be made on Form 3922 when shares of stock transferred were acquired at an exercise price that is less than 100 percent of the value of the stock on the date of grant or when the value of the stock was not fixed or determinable on the date of grant.
In addition to general identifying information about the issuing company and employee, the information statement for an ISO must provide the following information:
Box 1: Date of grant;
Box 2: Date of exercise;
Box 3: Exercise price per share;
Box 4: Fair market value per share on the date of exercise;
Box 5: Number of shares transferred to the employee as the result of the exercise; and
Box 6: Show information of the corporation, other than transferor, whose stock is being transferred.
The information statement for transfers of stock under an ESPP requires the following information:
Box 1: Date of grant;
Box 2: Date of purchase/exercise;
Box 3: Fair market value per share on the grant date;
Box 4: Fair market value per share on the date of exercise/purchase;
Box 5: Exercise/Purchase price;
Box 6: Number of shares transferred;
Box 7: Date the legal title was transferred; and
Box 8: If the exercise price was NOT fixed or determinable on the date of the grant, the exercise price as if the option was exercised/purchased on the date of the grant; otherwise the box 8 should be blank.
Non-scannable forms in red may be obtained from IRS website as follows:
- Form 3921: http://www.irs.gov/pub/irs-pdf/f3921.pdf
- Form 3922: http://www.irs.gov/pub/irs-pdf/f3922.pdf
- Form 8809 (scannable): http://www.irs.gov/pub/irs-pdf/f8809.pdf
Extension of Time to File
Form 8809 must be filed by the due date of the returns to the IRS. For paper returns the extension is due by February 28 and for electronically filed forms the extension's due date is March 31.
The Form 8809 grants ONLY an additional 30 days to file Forms 3921 and/or 3921 with the government.
Failure to submit either a Form 3921 or 3922 to the IRS and to the employees may result in a penalty of $100 for each return that has not been timely filed, with the aggregate assessment similarly capped at $1.5 million in one calendar year per employer. Penalty amounts may be reduced to $30 per statement (capped at $250,000) if corrections are made within 30 days of the filing deadline. If corrections are made on or before August 1 of the calendar year in which the required filing date occurs the penalty may be reduced to $60 per statement (capped at $500,000). Failures to deliver and file factually correct and complete reports, even if they are delivered and filed on time, can also result in the imposition of fines on the employer.
While these filings are required only once per year, please note that each Form 3921/3922 may report only one transaction. As a result, employers may need to prepare multiple forms for a single employee. This may occur, for example, when an employee has multiple ISO exercises during a single calendar year.
Employers should contact their Marcum tax advisor in order to expedite the filing. Also, there are many internet providers who offer forms 3921 and 3922 filings by paper or online.