As discussed in our December 16, 2010 blog article, the IRS issued final regulations in 2009 under Section 6039 of the Internal Revenue Code (the “Code”) that require employers to annually furnish each employee who exercised incentive stock options (“ISOs”) or sold or otherwise transferred shares acquired under an employee stock purchase plan (“ESPP”) during a year with a detailed information statement by January 31 of the following year. In addition, employers must generally file an information return with the IRS by February 28 of the following year, or by March 31 for employers filing electronically. These due dates are delayed until the next business day if they otherwise fall on a weekend.

Information Statements to Employees for 2021 ISO/ESPP Transactions

If in 2021 an employee exercised an ISO (i.e. a stock option described in Section 422 of the Code), the Employer must provide the employee with a written information statement by January 31, 2022. Form 3921 should be used for this purpose (click on these two IRS links for additional information Form 3921 About Form 3921). However, a qualifying substitute form may also be used so long as it contains the required information. Only one transaction can be reported on a Form 3921. In other words, an employee will receive more than one Form 3921 from his/her employer for a calendar year if the employee effected more than one ISO exercise in such year.

If in 2021 legal title to stock purchased under an ESPP (i.e. a plan...

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