Form 3921 – Who Needs to File, When to Do it, and How to Do it
The IRS requires any company that had specified employees that exercised incentive stock options (ISOs) in the previous tax year to file Form 3921. If you fall into this category, you must file one form for each such employee. The form comes with unique deadlines and consequences for failure to file. In this blog, we’ll go over, what Form 3921, who needs to file, due dates and deadline, filing fees and penalties and your options for completing this task. Because there may be penalties for non-compliance, it may be beneficial to review this information carefully to ensure sure you file correctly and on time.
What is Form 3921?
Form 3921 is a form that companies must file with the IRS when a specified employee exercises an incentive stock option (ISO). This form must be filed for the calendar year in which the ISO is exercised by specific deadlines. A copy of the form must also be distributed to each applicable shareholder.
Who needs to file Form 3921?
Companies with shareholders who have exercised incentive stock options (ISOs) in the previous calendar year need to file.\
Due Dates and Deadlines for Form 3921
- Provide Copy B to All Employees: 2/1 deadline
- Your company needs to provide Copy B of the form to all applicable shareholder by the 1st of February.
- Paper File Copy A with the IRS: 3/1 deadline
- Deadline to electronically file Copy A with the IRS: 3/31 deadline
- Note: Penalties for non-compliance can be severe and include fines. It is best to ensure you file correctly and on time to avoid these.
Form 3921 Software
A simple way to manage the information needed for your Form 3921 and Form 3922 filings is with a cap table management platform like Shareworks Startup Edition. Startup edition is an online cap table management platform that can help you with organizing data you need to complete Form 3921 (among many others including Form 3922, stock option expensing under ASC 718, etc.) As long as your cap table and shareholder info are up-to-date, the platform can generate everything necessary to complete your Form 3921.
Shareworks by Morgan Stanley, Morgan Stanley Smith Barney LLC, and its affiliates and employees do not provide legal or tax advice. You should always consult with and rely on your own legal and/or tax advisors.
Shareworks by Morgan Stanley services are provided by Morgan Stanley Smith Barney LLC, member SIPC, and its affiliates, all wholly owned subsidiaries of Morgan Stanley.
CRC 3623946 (06/21)