For the 2010 tax year, the IRS has issued new information reporting forms for both incentive stock options (ISOs) and employee stock purchase plans (ESPPs), and they must be made available to employees by January 31, 2011. The stocks may be optional, but the paperwork is not.
These new forms apply to both public and private employers, so if your company offers stock options, it’s time to read up on and order the new forms.
What you need to know:
- The information provided to your employees also needs to be filed with the IRS (2010 is the first tax year that this is the case).
- For paper filing, downloadable forms won’t cut it; the documents MUST be scanned. You can order these forms online or over-the-phone from the IRS.
- If you will be filing more than 250 forms, you MUST file electronically using the IRS Filing Information Returns Electronically (FIRE) system – March 1st, 2011 is the last day to enroll in FIRE.
- Deadlines to file: March 31st, 2011 for electronic filers and February 28th, 2011 for paper filers.
Failure to file correctly or on time can result in fines, ranging from $15 to $100 per incident.
Luckily, our partners at Squire Sanders have your backs! To ensure you won’t have to pay out, read “New Reporting Requirements for Incentive Stock Options and Employee Stock Purchase Plans” by clicking here.