Certain Information Statements for ISOs and ESPPs Due by January 31, 2017

As reported in Part 1 of our 2016 End of Year Plan Sponsor “To Do” List, Section 6039 of the Code requires employers to provide a written information statement to each employee or former employee and file information returns with the IRS regarding: (1) the transfer of stock pursuant to the exercise of an Incentive Stock Option (“ISO”); and (2) the first transfer by the employee or former employee of stock purchased at a discount under an Employee Stock Purchase Plan (“ESPP”).  For ISO exercises and ESPP transfers occurring in 2016, the Section 6039 employee information statement requirement is satisfied by providing Form 3921 (for ISOs) and Form 3922 (for ESPPs) to employees no later than January 31, 2017.  The Section 6039 IRS return requirement is satisfied by providing the IRS with copies of the corresponding Forms 3921 and Form 3922 by February 28, 2017 (for paper filings) and March 31, 2017 (for electronic filings).

The failure to timely file Form 3921 and/or Form 3922, as applicable, can subject an employer to the penalties described in Section 6721 and 6722 of the Code.

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