Notice and Reporting Deadlines Approaching for Incentive Stock Option and Employee Stock Purchase Plans

Blog
January 14, 2022

Under Section 6039 of the Code, corporations are required to furnish statements to current and former employees who exercised an incentive stock option (ISO) in 2021 or acquired shares as part of the corporation’s 423 employee stock purchase plan (ESPP). The filings are intended to provide the information necessary for current and former employees to calculate the tax impact of such transactions. These statements must be furnished via Forms 3921 and 3922 no later than January 31, 2022.

Corporations must submit all manual copies of Forms 3921 and 3922 to the IRS by February 28, 2022; electronic submissions are due no later than March 31, 2022.

Form 3921 is for ISO exercises and provides the following information:

  • The name, address and employer identification number of the corporation transferring the shares
  • The name, address and employer identification number of the corporation whose stock is subject to the option (if other than the corporation transferring the shares)
  • The name, address and identifying number of the person to whom the shares were transferred
  • The date when the option was granted
  • The exercise price per share
  • The date when the option was exercised
  • The fair market value of a share on the date when the option was exercised
  • The number of shares transferred

Form 3922 is for the transfer of employee stock purchase plan shares and provides the following information:

  • The name, address and employer identification number of the corporation whose stock was transferred
  • The name, address and identifying number of the transferor (i.e., the employee who acquired the shares under the ESPP)
  • The date when the option was granted to the transferor
  • The fair market value of a share of stock on the date the option was granted
  • The actual exercise price paid per share
  • The exercise price per share determined as if the option was exercised on the date the option was granted (to be provided only if the exercise price per share is not fixed and determinable on the date of grant)
  • The date when the option was exercised
  • The fair market value of a share of stock on the date the option was exercised
  • The date when the legal title to the shares was transferred by the transferor
  • The number of shares to which title was transferred by the transferor.

Penalties will result if Forms 3921/3922 are not furnished to the appropriate employees (current or former) and Internal Revenue Service on a timely basis.

If you should have any questions, please contact Mark Flanagan of Aronson’s Compensation and Benefits Practice at 301-231-6257.