IRS Form 15620: What the Section 83(b) Election Form Is and How to File It

IRS Form 15620 is the form for making a Section 83(b) election, which lets you pay tax on restricted property (usually company stock) when you receive it instead of when it vests. The election has to be filed within 30 days of the transfer. That deadline is the part people miss, and it can't be extended. Here's what the form does, who uses it, and how the filing works.

What is IRS Form 15620?

Form 15620 is the IRS's standardized version of the Section 83(b) election. For years, taxpayers made the election by writing their own statement and mailing it in. The IRS now offers a fill-in form so the required information is laid out in one place.

Using the form is optional. A properly written statement that includes the required information still works. Many people use Form 15620 because it reduces the chance of leaving something out.

What does a Section 83(b) election actually do?

Normally, when you receive stock that is subject to a vesting schedule, you're taxed as it vests. The tax is on the fair market value at each vesting date, minus anything you paid, and it's taxed as ordinary income. If the stock has grown a lot by then, that bill can be large.

An 83(b) election changes the timing. You choose to be taxed at the transfer date instead, on the fair market value at that moment minus what you paid. Later appreciation is then generally taxed as capital gain when you sell, not as ordinary income. Your capital gain holding period also starts at the transfer date.

For a founder who receives shares at a very low value, the income recognized at transfer may be zero or close to it. That's why the election is common in early-stage companies. For related background on how gains are taxed, see our guide to California capital gains tax.

Who files Form 15620?

The election applies to property transferred in connection with services that is subject to a substantial risk of forfeiture. In practice, that usually means:

• Founder stock subject to vesting
• Restricted stock granted to employees or contractors
• Shares acquired by early-exercising stock options, where the shares you receive are unvested
• Interests in some partnerships or LLCs that are subject to vesting

It generally doesn't apply to restricted stock units (RSUs), because no property is transferred until they settle. It also isn't used for a standard option grant. The election is about property you actually receive, not a right to receive it later.

What is the deadline for filing?

You must file the election no later than 30 days after the date the property was transferred to you. The IRS does not grant extensions, and a late election is generally invalid. Count calendar days, weekends included, starting from the transfer date.

If the 30th day lands on a weekend or legal holiday, the deadline generally rolls to the next business day. Don't plan around that, though. File well inside the window, ideally within the first week or two.

What information goes on Form 15620?

The form asks for the details the regulations require. Expect to provide:

• Your name, address, and taxpayer identification number
• A description of the property (for example, the number of shares and the company)
• The date of transfer and the tax year it applies to
• A description of the vesting or forfeiture restrictions
• The fair market value of the property at transfer, figured without regard to the restrictions
• The amount you paid for the property
• The amount you're including in income (fair market value minus the amount paid)

You sign it. The fair market value figure is the one to get right, since it drives the income you report. For private companies, it usually comes from the company's most recent 409A valuation or a similar documented basis.

Where do you mail IRS Form 15620?

You mail the election to the IRS office where you file your income tax return. The Form 15620 instructions list the mailing address by state, so use the address from the current instructions rather than one from an old forum post.

Because the deadline is strict, send it by certified mail with a return receipt, or use another method that gives you proof of mailing. Keep that receipt with a copy of the signed election. Don't count on getting a confirmation back from the IRS.

You also need to give a copy of the election to the company that transferred the property to you. Check with the company on how it wants to receive it, and keep proof of delivery there too.

Can you file IRS Form 15620 online?

Historically, 83(b) elections were paper-only. People often search for an online option, and the IRS has been moving toward electronic submission. Whether it's available can change, so check IRS.gov for the current status before relying on it.

If online filing isn't available when you need it, assume you're mailing it. Don't wait for an electronic option if your 30-day window is closing.

What are the risks of making the election?

The election is a bet, and the downsides are real:

• You pay tax up front on value you haven't yet been able to sell.
• If the stock later drops in value, you can't get the tax you paid back.
• If you forfeit the shares, for example by leaving before they vest, you generally can't deduct the income you recognized. The loss is limited to what you actually paid.
• A missed deadline can't be fixed.

Those tradeoffs are why the decision depends on your numbers, including the spread at transfer, your other income, and whether the stock could trigger alternative minimum tax issues later. If you expect a sale or a large payout down the road, it also helps to read up on tax planning before a big liquidity event.

What happens after you file?

You report the election consistently on your tax return and keep your records. Those include the signed election, proof of mailing, and the valuation you relied on. When you eventually sell, your basis is generally the amount you paid plus the amount you included in income because of the election.

If the stock is compensation from an employer, the income you recognize may also have withholding consequences. For how that works on the employer side, see California payroll taxes. If you run your own company and issue stock to yourself or others, our S-corp and business tax services page explains how we work with owners on structure and compliance.

What should you do next?

Confirm the exact transfer date, get the fair market value documented, and calendar your 30th day today. Then decide whether the election makes sense for your situation before you sign anything. If you've already missed the window or aren't sure it applies, tax planning help is the right place to start.

At SBZ Tax, we work with founders, executives, and investors on equity compensation questions. You can book a free consultation, call us at 818-748-2020, or visit our office at 190 Sierra Ct Ste 335, Palmdale, CA 93550. We also serve clients nationwide, remotely.

This article is general information, not tax advice for your specific situation. Talk to a qualified professional before making an 83(b) election.