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Regulatory alert: Sec. 83(b) elections, address for refunds

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in Office Management,Payroll Management

The IRS has been busy adding to its regulatory agenda. Here’s the latest news from the regulations front.

1. Proposed regs on Section 83(b) elections. Under tax code Section 83, employees who are paid in company stock or other property that’s subject to a substantial risk of forfeiture aren’t taxed on the value of that property until the risk lapses and the property vests.

Exception: Immediate withholding applies when employees file written Section 83(b) elections with you and the IRS within 30 days of receiving the property. They must also attach a second copy of their 83(b) elections to their 1040s. The IRS has created a model Section 83(b) notice you may use. The model notice starts on Page 9.

The paper-based nature of Section 83(b) elections has impeded employees’ ability to e-file their 1040s. Accordingly, these proposed regulations eliminate the need for employees to include a copy of their elections with their 1040s. The regs are proposed to be effective with property transferred to employees after Jan. 1, 2016, but employees may rely on the proposed regs for property transferred this year. (80 F.R. 42439, 7-17-15)

2.  Final regs on where to send tax refund requests. Final regs clarify that unless otherwise directed in tax forms, notices or IRS correspondence, the place to file a claim for a tax credit or refund is the service center where you currently file returns for the type of tax to which your claim relates, regardless of where the tax is paid. The regs also clarify that for refunds of payroll and FUTA taxes, a separate claim must be made for each calendar quarter. These final regs apply to claims for tax credits or refunds made on or after July 24, 2015. (80 F.R. 43949, 7-24-15)

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