The IRS published a proposed regulation change that removes the requirement that taxpayers file a copy of their 83(b) elections with their tax returns. As explanation, the IRS pointed to its goal of encouraging more taxpayers to use e-filing, which is often not possible for taxpayers attempting to include their 83(b) election copy with their e-filed federal income tax return. The IRS has proposed that this change be effective for transfers occurring on or after January 1, 2016, but has also stated that taxpayers may rely on this guidance for transfers occurring on or after January 1, 2015.

To date, taxpayers have suffered much uncertainty related to the requirement of filing a copy of their 83(b) election with their return, including:

• whether a failure to file the copy nullifies an otherwise valid election;
• whether to file two copies with different IRS centers when a taxpayer relocates mid-year; and
• whether to file additional copies when a return is amended.

With respect to the first issue, IRS rulings (including this one) have stated that a valid and timely election is not disturbed by a taxpayer’s failure to file the subsequent copy. Of course, a careful stockholder with much at stake is often not comfortable relying on IRS rulings issued to other parties. Thankfully, taxpayers need not lose anymore sleep over these issues related to the election copy.

While this guidance is clearly helpful, Section 83 and the 83(b) election continue to contain many landmines, including:

• the 30-day deadline to file an election;
• the requirement to elect in cases where the shareholder pays full fair market value for the restricted property; and
• election mechanics for non-US shareholders.