On November 7, 2024, the IRS unveiled Form 15620, Section 83(b) Election, designed to streamline the process for taxpayers making Section 83(b) elections.

Taxpayers receiving restricted property (e.g., stock or partnership interests) as part of a service-related transfer typically report compensation income when the property “vests,” or is no longer subject to a substantial risk of forfeiture. This amount is calculated as the fair market value at vesting minus any amount paid for the property. However, taxpayers can elect under Section 83(b) to report the income at the time the unvested property is transferred instead, potentially locking in a lower taxable amount. This election must be made within 30 days of the transfer and is generally irrevocable, with strict compliance requirements for validity.

The introduction of Form 15620 marks the first time the IRS has provided a standardized method for making Section 83(b) elections. Previously, taxpayers relied on sample language in Rev. Proc. 2012-29 or adhered to the requirements set forth in Reg. 1.83-2. While use of the form is not mandatory, it simplifies the process and is available for immediate use.

Taxpayers electing to use Form 15620 must mail the completed form to the IRS office where they file their federal income tax return. Additionally, a copy of the form should be provided to the entity for whom the services were performed in connection with the property transfer, consistent with existing procedures.

The IRS has announced plans to enable electronic filing of Form 15620 in the future. Until then, all other requirements for Section 83(b) elections remain unchanged.

Click the link to view the form:  https://www.irs.gov/pub/irs-pdf/f15620.pdf