This is a reminder to public and private companies that grant incentive stock options (“ISOs”) or maintain a taxadvantaged employee stock purchase plan (“ESPP”). Under IRS regulations, these companies must provide information statements on Forms 3921 and 3922 (or statements reflecting the same information) no later than February 1, 2016, to any employee or former employee who exercised an ISO during 2015 or transferred shares of stock during 2015 that were previously acquired pursuant to an ESPP. Companies that fail to provide such statements on a timely basis may be liable for penalties of up to $260 per statement, up to a maximum of $3,178,500 per year (higher penalties are possible for companies that intentionally disregard the rules).
In addition, companies must file information returns with the IRS on Forms 3921 and 3922 no later than February 29, 2016 (if filed on paper) or March 31, 2016 (if filed electronically). Companies that are required to file 250 or more of either type of form must file the returns electronically. Companies that fail to timely file these information returns may be liable for penalties of up to $260 per information return, up to a maximum of $3,178,500 per year (higher penalties are possible for companies that intentionally disregard the rules).
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