New IRS Form 15620 Standardization Simplifies Section 83(b) Elections

The Internal Revenue Service (IRS) recently released IRS Form 15620, Section 83(b) Election (Form 15620), an approved form for taxpayers to use to make a Section 83(b) election. A taxpayer is not required to use Form 15620 to make a Section 83(b) election, but using this form will ensure that taxpayers include all required information, and we recommend using the form going forward.

By way of background, under Code Section 83(a), when a taxpayer receives property (such as restricted stock or profits interest) as compensation in connection with the performance of services, and the property is subject to a substantial risk of forfeiture, the taxpayer is not subject to tax on such compensation at the grant date. However, the taxpayer is entitled to make a Section 83(b) election to accelerate ordinary income equal to the value of the stock or profits interest at the grant date, less any amount paid by the taxpayer for such property. By making a Section 83(b) election, the taxpayer therefore may be eligible for long-term capital gains treatment on future appreciation in the property, if the taxpayer holds the property for more than a year before selling it.

Section 83(b) elections must be mailed to the IRS service center where the taxpayer files its annual income tax return within 30 days following the date on which the taxpayer receives the restricted property. Section 83(b) elections are irrevocable, and if a taxpayer fails to file a Section 83(b) election within the 30-day time period, the taxpayer may not file a late Section 83(b) election.

Prior to the release of Form 15620 on November 7, 2024, taxpayers were required to make a Section 83(b) election by filing a self-drafted election based on IRS guidance and sample language. However, due to the lack of a standardized Section 83(b) election form, taxpayers lacked certainty that their self-drafted Section 83(b) elections were compliant with the applicable rules and guidance. Form 15620 provides certainty and therefore should prove to be a valuable tool for taxpayers. All other filing and procedural requirements relating to Section 83(b) elections continue to apply.

Attorneys in Ballard Spahr’s Tax Group and Employee Benefits and Executive Compensation Group are available for counsel regarding Section 83(b) or Form 15620. 

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