A bipartisan group of House lawmakers introduced legislation this week that seeks to modernize how 83(b) election forms for startups are filed with the Internal Revenue Service (IRS).
The Eliminating Paperwork for Startups Act (H.R. 2611) – introduced by Reps. Patrick McHenry (R-NC), Adrian Smith (R-NE), Susan DelBene (D-WA), and Nydia Velazquez (D-NY) — would allow individuals to file 83(b) election forms and receive their responses electronically. Under current law, these forms are required to be submitted by paper mail.
“It is past time for federal agencies to update antiquated filing systems to match modern technology,” said McHenry, chair of the House Financial Services Committee. “The Eliminating Paperwork for Startups Act is another step in House Republicans’ mission to modernize how federal agencies operate and interact with the public. By reforming mandatory mail-in filing requirements, this legislation will streamline the tax filing process for entrepreneurs and reduce the burdens facing our nation’s small businesses. I’m proud to reintroduce this bipartisan legislation alongside my colleagues.”
Section 83(b) of the tax code gives a startup’s employees and founders the option to pay taxes on total fair market value of restricted stock at the time of granting or vesting. The election must be made within 30 days after issuing restricted shares.
“It’s critical that lawmakers work to make it as easy as possible for entrepreneurs to start and run small businesses. Unfortunately, the outdated mandatory mail-in filing requirements for 83(b) forms create unnecessary burdens and delays for new business startups,” Velazquez said. “I’m proud to support the Eliminating Paperwork for Startups Act, which will help modernize how startups file their taxes. This bill will help small firms save time and resources, so they can focus on what they do best, creating jobs.”