As amended by Section 403 of the Tax Relief and Health Care Act of 2006, section 6039 requires corporations to file an information return with the IRS, in addition to providing employees with an information statement, following a stock transfer. Returns required by §1.6039-1(a) of these final regulations and information statements required by §1.6039-2(a) of these final regulations must be made using Form 3921, Exercise of an Incentive Stock Option Under Section 422(b). Returns required by §1.6039-1(b) of these final regulations and information statements required by §1.6039-2(b) of these final regulations must be made using Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c).

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Form 3921 - Exercise of an Incentive Stock Option (ISO) Under Section 422(b)
For each transfer made during the previous year, the employer must provide to the IRS on Form 3921 the following:

• Name, address and EIN of the company transferring the stock
• The name, address and EIN of the company whose stock is being transferred
• Name, address and social security number of the recipient of the stock transfer
• Date of option grant
• Exercise price per share
• Date of option exercise
• Fair market value per share on the date of exercise
• Number of shares transferred.

Form 3922 - Transfer of Stock Acquired Through an Employee Stock Purchase Plan (ESPP) Under Section 423(c)
For each transfer made during the previous year, the employer must provide to the IRS on Form 3922 the following:

• Name, address and social security number of the recipient
• Name, address and EIN of the company whose stock is being transferred
• Date of option grant
• Fair market value per share on the grant date
• Exercise price per share
• Date of option exercise
• Fair market value per share on the date of exercise
• Date the legal title to the shares was transferred
• Number of full and partial shares that were transferred.

Statements to participants for ISOs and ESPPs
Under the new law, statements still must be furnished to participants with regard to both ISOs and ESPPs. These statements must be provided by January 31, and it is anticipated that either delivery by mail or electronically generally will be permitted.

Deadlines
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.

Electronic Filing
Beginning 2024, you are required to file Forms 3921 and 3922 electronically if you have 10 or more returns to file with the IRS.

Penalties for Late Filings

• $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.