The Internal Revenue Service (IRS) issued final regulations eliminating the requirement that taxpayers submit a copy of a Section 83(b) election with their tax return for the year the property subject to the election was transferred.
The final regulations apply to property transferred on or after January 1, 2016. As provided in the proposed regulations, taxpayers may also rely on this guidance for property transferred on or after January 1, 2015.
Like the proposed regulations, the final regulations eliminate the requirement that a copy of the Section 83(b) election be submitted with an individual's tax return for the year the property subject to the election was transferred. The final rule allows taxpayers who wish to electronically file their annual income tax return but who have been unable to do so because of the requirement that they submit a copy of their Section 83(b) election (which cannot be electronically filed) with their income tax return to do so.
The final regulations also revoke Revenue Procedure 2012-29 to the extent that it requires a taxpayer to submit a copy of a Section 83(b) election with their tax return.
Practical Implications
These final regulations help to promote the IRS's goal of encouraging taxpayers to file electronically. However, taxpayers should note that although the regulations eliminate the requirement to include a copy of the Section 83(b) election with their tax return, the election must still be filed with the IRS no later than 30 days after the date that the property subject to the election is transferred to the service provider (see Standard Documents, Code Section 83(b) Election: Restricted Stock and Code Section 83(b) Election: Profits Interests). The IRS also reminds taxpayers of their general recordkeeping responsibilities.