Employers, from startups to public companies, need to be aware of the following requirements and take action by January 31st if they apply.  Section 6039 of the Internal Revenue Code requires a corporation to furnish a written statement to any employee or former employee who either (i) exercised an incentive stock option within the meaning of Section 422 of the Code (ISO) during 2013 or (ii) during 2013 first transferred legal title to shares acquired under the corporation’s employee stock purchase plan within the meaning of Section 423 of the Code (ESPP). This requirement applies to both privately held and publicly traded corporations. The corporation must furnish these statements on Forms 3921 and 3922 no later than January 31, 2014.

IRS return filing requirement for 2013 transactions

In addition to the employee information statements, corporations must file returns with the Internal Revenue Service on Forms 3921 and 3922 no later than February 28, 2014, if filed on paper, or March 31, 2014, if filed electronically.  These information returns, Form 3921 for ISO exercises and Form 3922 for initial ESPP share transfers, must be filed electronically by any corporation required to file 250 or more of a particular return and may otherwise be filed either electronically or in paper form.

Deadlines

Employee information statements for 2013 transactions must be furnished no later than January 31, 2014. Information statements may be furnished to employees electronically in accordance with requirements set forth in the General Instructions for Certain Information Returns.

Paper filings of Form 3921 and 3922 for 2013 transactions must be submitted to the IRS with transmittal Form 1096 for each type of return and are due no later than February 28, 2014. However, corporations required to file 250 or more of either type of form must file that form electronically following the procedures contained in Publication 1220. Electronic filings of Forms 3921 and 3922 for 2012 transactions are due no later than March 31, 2014.

For more information on the contents required to be provided in such information statements, as well as links to the relevant forms and IRS instructions, see this recent DLA Piper Client Alert by William H. Hoffman of our Employee Benefits and Executive Compensation Group.