Filing an 83(b) election can save you thousands of dollars in taxes, but you only benefit if you submit it to the right place within the strict 30-day deadline.

Many employees and founders who receive restricted stock or equity compensation miss out on significant tax benefits because they don't know the proper filing procedures.

You must send your 83(b) election to the same IRS Service Center where you normally file your annual tax return. The IRS provides specific mailing addresses based on your location.

You need to mail copies to multiple parties and ensure everything is postmarked within 30 days of receiving your equity grant.

This guide explains where to send your 83(b) election, what information to include, and how to avoid mistakes that could invalidate your filing.

Key Takeaways

• Mail your 83(b) election to the IRS Service Center where you file your regular tax returns within 30 days of your equity grant date.
• Send copies to both the IRS and your employer while keeping a copy for your records with proof of mailing.
• Missing the 30-day deadline or using the wrong address can cost you significant tax savings and cannot be corrected later.

Understanding the 83(b) Election

The 83(b) election is a tax strategy that lets you pay taxes on restricted stock when you receive it instead of when it vests.

This choice can lead to significant tax savings and better capital gains treatment for equity compensation.

What Is an 83(b) Election?

An 83(b) election is a tax filing you make with the IRS within 30 days of receiving restricted stock or other equity compensation.

When you file this election, you choose to pay ordinary income tax on the stock's current fair market value right away.

Without an 83(b) election, you pay taxes when the stock vests.

The default tax rules under Section 83 apply if you don't file the election on time.

The main benefit comes from locking in the current value for tax purposes.

If your company's stock value grows, you only pay capital gains tax on the increase when you sell.

This can save you thousands of dollars compared to paying ordinary income tax rates on the full vested value later.

Eligible Participants and Applicable Scenarios

You can file an 83(b) election in several situations involving equity compensation:

Common scenarios include:

• Receiving restricted stock as an employee

• Getting founder shares subject to vesting

• Obtaining stock options with early exercise rights

• Receiving equity grants with substantial risk of forfeiture

The election works best when you receive stock at a low valuation.

Early-stage company employees and founders benefit most because their stock often has minimal current value but high growth potential.

You must have a substantial risk of forfeiture for the election to apply.

This means you could lose the stock if certain conditions aren't met, like staying with the company for a specific period.

Key Tax Implications and Benefits

Filing an 83(b) election creates immediate tax consequences but can provide long-term savings.

You pay ordinary income tax on the difference between what you paid for the stock and its fair market value when received.

Tax benefits include:

• Converting future ordinary income to capital gains

• Starting the capital gains holding period immediately

• Avoiding higher tax rates on appreciated stock value

The tax savings can be substantial.

Ordinary income tax rates reach up to 37%, while long-term capital gains rates max out at 20% for high earners.

However, you take on risk with this strategy.

If the stock value drops or becomes worthless, you can't get back the taxes you already paid.

You also need cash upfront to pay the immediate tax bill, which can be challenging for employees with limited resources.

Where to File an 83(b) Election

You can file your 83(b) election through two main methods: physical mail to the correct IRS service center or electronically using the new online system.

The IRS now permits online filing of Form 15620 as a streamlined alternative to traditional mailing.

Physical Mailing Addresses for IRS Submission

When mailing your 83(b) election, you need to send it to the specific IRS service center that handles your tax return.

The IRS requires filing with the Internal Revenue Service Center where you file your return.

Each state has a designated service center address.

For example, if you live in California, your election goes to a different address than someone filing from New York.

You must use certified mail or another trackable delivery method.

This creates proof that you filed within the required 30-day deadline.

The election must arrive at the correct service center within 30 days of receiving your restricted stock.

Missing this deadline means you cannot make the election at all.

Submitting Electronically via IRS Website

The IRS introduced electronic filing for 83(b) elections in 2024.

You can now file Form 15620 online instead of mailing a written statement.

Form 15620 replaced the old method of writing a custom letter.

This standardized form makes the process easier and reduces errors.

Online filing gives you immediate confirmation that the IRS received your election.

This eliminates concerns about mail delivery or processing delays.

You can access the electronic filing system through the official IRS website.

The system walks you through each required field to ensure you include all necessary information.

Choosing the Correct Service Center

Your filing location depends on where you submit your annual tax return.

If you normally file your tax return with the Kansas City service center, that's where your 83(b) election must go.

You cannot choose any service center you prefer.

The election must match your regular tax filing location to ensure proper processing.

Key considerations for service center selection:

• Use the same center as your tax return

• Check current IRS publications for address updates

• Verify the address before mailing

If you're unsure about your service center, check your previous tax return correspondence.

The IRS typically includes the processing center information on official communications.

Step-by-Step Filing Process

Filing an 83(b) election requires specific documentation and following exact procedures within 30 days of your stock grant.

The process involves gathering required information, potentially using IRS Form 15620, and maintaining proper records for proof of timely filing.

Required Information and Documentation

Prepare a written statement that includes your name, address, and taxpayer identification number.

The statement must describe the property you received and specify the date of transfer.

The documentation requires the fair market value of the stock at the time of grant.

Include the amount you paid for the shares, if any.

Your statement needs to contain specific language stating that you are making an election under Section 83(b) of the Internal Revenue Code.

Sign and date the election form.

The IRS considers this election filed when received, not when mailed.

Timing is critical for employees receiving stock compensation.

Using IRS Form 15620

IRS Form 15620 offers a streamlined online process for employees and individual service providers.

This electronic filing option simplifies the traditional paper-based approach.

Form 15620 eliminates the need for certified mail when filing electronically.

The online system provides immediate confirmation of receipt.

You must still meet the 30-day deadline regardless of whether you use the electronic form or paper filing.

The online option does not extend this critical timeframe.

Not all taxpayers qualify for Form 15620.

Verify your eligibility before choosing this filing method over the traditional paper process.

Providing Copies to Employer and Retaining Records

Provide a copy of your 83(b) election to your employer within 30 days of filing with the IRS.

This copy serves as notification of your tax election choice.

Your employer needs this information to properly handle payroll tax withholding and reporting.

The copy helps ensure consistent tax treatment between your return and employer records.

Keep detailed records of your filing for your tax return preparation.

This includes copies of the election, proof of timely filing, and any delivery confirmations.

When using certified mail, retain the receipt and tracking information as evidence.

These documents prove you met the 30-day filing deadline if questions arise later.

Timing and Deadlines

The 83(b) election has a strict 30-day filing deadline that cannot be extended.

Missing this deadline means taxpayers lose all potential tax benefits and face higher tax bills when their equity vests.

30-Day Filing Requirement

The most critical aspect of filing a section 83(b) election is meeting the 30-day deadline.

You must file the election within 30 days after receiving the restricted stock or equity.

This deadline is calculated from the date the property transfers to you.

The IRS strictly enforces this timeline with no exceptions.

The IRS does not grant extensions for this deadline.

Even if the 30th day falls on a weekend or holiday, you cannot get extra time.

The filing must reach the IRS within these 30 days.

Use certified mail or another method that provides proof of delivery to ensure your election arrives on time.

Many taxpayers miss this deadline because they don't understand how quickly it approaches.

Act immediately after receiving restricted equity.

Consequences of Missing the Deadline

Missing the filing deadline for an 83(b) election can cost me thousands of dollars in direct tax consequences. If I don't file a valid 83(b) election, Section 83's default tax rules apply.

I will pay ordinary income tax on the full value of my equity when it vests. The tax rate can reach as high as 37% for high earners.

If my stock is worth $50,000 at grant but $200,000 at vesting, I would pay taxes on the full $200,000 without the election. With a timely election, I would only pay ordinary income tax on the original $50,000.

I cannot reverse the election once I file it, and missing the deadline removes my option to make the election.

Considerations for Online vs. Mail Submission

The IRS accepts 83(b) elections through electronic submission and traditional mail. Electronic filing offers speed and convenience.

Mail submission provides physical proof of delivery through certified mail options.

Benefits of Electronic Filing

Electronic filing through Form 15620 provides immediate confirmation of submission. I can submit my election instantly and avoid mail delays or postal service issues.

The online system requires an ID.me account for access. After logging in, I complete Form 15620 directly on the IRS website.

This process eliminates the risk of lost mail or delivery problems.

Key advantages of electronic submission:

• Instant submission confirmation
• No postal delays
• Reduced risk of lost documents
• Immediate processing by the IRS

The IRS now prefers online submission over mailed forms. Electronic filing is the recommended method for most taxpayers.

Obtaining and Keeping Submission Receipts

Electronic filing generates a digital receipt when I submit Form 15620. This receipt serves as immediate proof of timely filing within the 30-day deadline.

For mail submissions, I should use certified mail with return receipt requested. This creates a paper trail showing when the IRS received my election.

Documentation I should keep:

• Electronic confirmation receipts
• Certified mail tracking numbers
• Return receipt cards from USPS
• Copies of the completed election form

The electronic receipt shows the exact date and time of submission. This proof becomes crucial if the IRS questions whether I met the 30-day deadline.

Mail receipts only show the mailing date, not the date the IRS received the document. Electronic submission eliminates this timing uncertainty.

Practical Considerations and Professional Guidance

Making an 83(b) election carries significant risks if my equity loses value or I forfeit it. Tax professionals can help me evaluate whether this election fits my specific situation and equity compensation package.

Risks and Limitations of the 83(b) Election

The most significant risk I face with an 83(b) election is immediate tax liability on stock that may never vest or could lose value. If I forfeit my restricted stock or options, the IRS won't refund the taxes I already paid.

I cannot deduct the taxes paid if my equity becomes worthless. This creates a permanent loss of the money I spent on taxes for stock I never actually owned.

Market volatility poses another major risk. If my company's stock price drops significantly after I file the election, I have paid taxes on a higher valuation than what my shares are actually worth.

83(b) elections are generally irrevocable, so I cannot change my mind later. This permanent decision requires careful consideration of my financial situation and risk tolerance.

The election also accelerates my tax burden. I must pay ordinary income taxes immediately rather than spreading them over the vesting period when I might be in a lower tax bracket.

Consulting Tax Professionals for Personalized Advice

Tax professionals can evaluate whether an 83(b) election fits my specific equity compensation and overall tax planning strategy. They analyze factors like my current tax bracket, expected future income, and the likelihood of my stock appreciating.

I should consult a tax advisor to understand the tax implications of different scenarios. They can model outcomes if my stock price increases, decreases, or if I leave the company before vesting.

Tax professionals help me calculate potential tax savings from capital gains treatment versus ordinary income tax rates. This analysis determines whether the immediate tax cost justifies the potential long-term benefits.

They also ensure I meet all filing requirements and deadlines. Missing the 30-day window or filing incorrectly can eliminate any tax advantages from the election.

Professional guidance becomes especially important for complex equity arrangements or when I have multiple grants with different vesting schedules.

Frequently Asked Questions

Filing deadlines, electronic submission options, and tax consequences are common concerns with 83(b) elections. Understanding revocation rules and proper documentation requirements can prevent costly mistakes.

What is the deadline for filing an 83(b) election after receiving restricted stock?

I must file the 83(b) election within 30 days of receiving the restricted stock. This deadline is strict and cannot be extended.

The 30-day period starts from the date I actually receive the stock, not when it vests. Missing this deadline means I lose the opportunity to make the election permanently.

I should mail the election with certified mail to ensure I have proof of timely filing. The postmark date determines whether I met the deadline.

Can the 83(b) election be filed electronically with the IRS, and if so, how?

Yes, I can now file 83(b) elections online using Form 15620. This electronic filing option is now available from the IRS.

The online system allows me to submit the election directly through the IRS portal. This method provides immediate confirmation of receipt.

I still need to include all required information in the electronic filing. The same content requirements apply whether I file online or by mail.

What are the potential consequences of not filing an 83(b) election?

If I don't file the 83(b) election, I will owe taxes on the stock's value as it vests over time. This can result in much higher tax bills if the stock appreciates.

I will pay ordinary income tax rates on the vesting amounts instead of capital gains rates. The difference between these rates can be significant.

My tax burden becomes unpredictable because it depends on the stock's future value at each vesting date. This creates planning difficulties.

Is it possible to revoke an 83(b) election once it has been made?

No, I cannot revoke an 83(b) election after I file it. The election is permanent and cannot be amended or revoked.

This permanency makes the decision important to consider carefully before filing. I should evaluate the potential risks and benefits thoroughly.

If the stock becomes worthless after I make the election, I cannot undo the tax consequences. I will have paid taxes on value I never actually received.

What documentation should be included when filing an 83(b) election?

I must include a written statement with specific required information about the stock transfer. The statement needs my name, address, and taxpayer identification number.

The filing must describe the property I received, including the number of shares and type of stock. I need to state the fair market value and the amount I paid for the stock.

I should also include the date I received the stock and a clear statement that I am making the 83(b) election. The statement must be signed and dated.

How does the 83(b) election affect the calculation of capital gains tax?

The 83(b) election sets your cost basis at the fair market value when you receive the stock.

You will pay capital gains tax on any future appreciation above this value.

If you do not make the election, your cost basis becomes the vesting-date value of each portion as it vests.

This usually leads to a lower cost basis and higher capital gains taxes.

Capital gains rates are generally lower than ordinary income tax rates.

You can save a substantial amount in taxes if your stock appreciates significantly over time.