This month, the IRS announced it would change 83(b) election procedures to permanently allow submission with e-signatures. This change will help founders and employees take advantage of a critical tax incentive intended to support employee ownership.
Amid the challenges of the COVID-19 pandemic, the IRS temporarily allowed taxpayers to electronically sign specific documents, including 83(b) elections, which enable founders and employee-owners to accelerate a portion of their tax liability on equity ownership to the date they acquired their shares. This e-signature allowance was set to expire on October 31, 2023.
On October 6, Carta and 32 signatories* sent a letter to the IRS urging them to make e-signatures for the 83(b) elections permanent. This week, the IRS officially formalized 83(b) e-signature allowance in its Internal Revenue Manual.
“This election is crucial for founders and employee-owners, as it enables them to accelerate the taxation of equity ownership to the date they are granted the shares, which can result in significant tax savings,” said Amy Miller, public policy director at Carta. “The decision marks an important milestone in modernizing IRS procedures.”
The coalition commends the IRS’s decision to extend this solution to founders and employee owners.
Read the full coalition comment letter to the IRS here
Learn how Carta can help auto-file your 83(b) election forms
*Signatories include:
500 GlobalCapital FactoryCarta, Inc.Cooley LLPCroke Fairchild Duarte & Beres LLCDavis Polk & Wardwell LLPEngineFenwick & West LLPgener8torGoodwin Procter LLPGunderson Dettmer Stough Villeneuve Franklin & Hachigian LLPJohnson & Oshan Law PLLCKoenig, Oelsner, Taylor, Schoenfeld & Gaddis PCLatham & Watkins LLPLowenstein Sandler LLPMayer Brown LLPMcDermott Will & Emery LLPMintz, Levin, Cohn, Ferris, Glovsky & Popeo PCMorrison & Foerster LLPNational Venture Capital AssociationOptimal Counsel LLPOrrick Herrington & Sutcliffe LLPPerkins Coie LLPPlug and PlaySidley Austin LLPSilicon Legal Strategy PCSimpson Thacher & Bartlett LLPStripe, Inc.Tribe Capital Management LLCUnion Square VenturesVela Wood PCWilmer Cutler Pickering Hale & Dorr LLPY Combinator Management LLC
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