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
*Signatories include:
500 Global
Capital Factory
Carta, Inc.
Cooley LLP
Croke Fairchild Duarte & Beres LLC
Davis Polk & Wardwell LLP
Engine
Fenwick & West LLP
gener8tor
Goodwin Procter LLP
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP
Johnson & Oshan Law PLLC
Koenig, Oelsner, Taylor, Schoenfeld & Gaddis PC
Latham & Watkins LLP
Lowenstein Sandler LLP
Mayer Brown LLP
McDermott Will & Emery LLP
Mintz, Levin, Cohn, Ferris, Glovsky & Popeo PC
Morrison & Foerster LLP
National Venture Capital Association
Optimal Counsel LLP
Orrick Herrington & Sutcliffe LLP
Perkins Coie LLP
Plug and Play
Sidley Austin LLP
Silicon Legal Strategy PC
Simpson Thacher & Bartlett LLP
Stripe, Inc.
Tribe Capital Management LLC
Union Square Ventures
Vela Wood PC
Wilmer Cutler Pickering Hale & Dorr LLP
Y Combinator Management LLC
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