U.S. Reps. Patrick McHenry (R-NC) and Adrian Smith (R-NE) introduced legislation that would modernize how 83(b) election forms are filed with the Internal Revenue Service (IRS).
The Eliminating Paperwork for Startups Act would require the IRS to allow individuals to file 83(b) election forms and receive their responses electronically. Currently, these forms are required to be submitted via paper mail.
“In 2022, it’s absurd that Americans are forced to use antiquated systems to file paperwork with federal agencies,” said McHenry, ranking member on the House Financial Services Committee. “Alongside my colleague Congressman Smith, I’m introducing the Eliminating Paperwork for Startups Act to push the IRS into the 21st century. Allowing individuals to submit these forms electronically will make government more efficient and reduce paperwork for our nation’s job creators. This is just one part of Republicans’ efforts to modernize how our federal agencies operate—reducing the burden on our nation’s startups and small businesses.”
Section 83(b) of the tax code gives a startup’s employees and founders the option to pay taxes on the total fair market value of the restricted stock when granting or vesting. The election must be made within 30 days after issuing restricted shares.
“America’s economy is driven by innovators who start businesses to put their ideas to work,” Smith, a member of the House Ways and Means Committee, said. “It makes no sense for the IRS to broadly encourage online filing while also mandating certain forms to be filed via paper mail. The IRS badly needs to move into the 21st century, and this bill represents a step in that direction.”