Employee Stock Reporting Deadlines Approaching

The Internal Revenue Service (IRS) released final versions of Form 3921 and 3922 on which employers are required to report information relating to incentive stock options (ISO) and employee stock purchase plans (ESPP).

A client alert from the Vorys law firm said for ISO or ESPP option exercises that occurred in 2010, Form 3921 or Form 3922 must be provided to employees by January 31, 2011, and filed with the Internal Revenue Service by February 28, 2011 (for paper filers) or March 31, 2011 (for electronic filers). Electronic filing is mandatory if 250 or more forms are being filed. An employer that voluntarily files electronically may take advantage of the extended filing deadline.

The law firm said the following information must be reported on Form 3921:

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  • Grant date of the ISO;
  • Exercise date of the ISO;
  • Exercise price per share;
  • Fair market value of a share on the exercise date; and
  • Number of shares transferred pursuant to exercise of the ISO.

The following information must be reported on Form 3922:

  • Grant date of the option;
  • Exercise date of the option;
  • Fair market value of a share on the grant date;
  • Fair market value of a share on the exercise date;
  • Price paid per share on the exercise date;
  • Number of shares to which legal title was transferred;
  • Date legal title of shares was first transferred; and
  • If the exercise price per share was not fixed or determinable on the grant date, the exercise price per share determined as if the option was exercised on the grant date.

An employer that fails to file (or fails to timely file) Form 3921 or Form 3922 with the Internal Revenue Service is subject to a penalty of up to $50 per form (capped at $250,000 per year) and an employer that fails to provide employees with a copy of Form 3921 or Form 3922 is subject to a penalty of $50 per form (capped at $100,000 per year), the law firm advised.

Senators File Brief in Health Reform Challenge

Senate Minority Leader Mitch McConnell (R-Kentucky) and 32 other GOP senators filed a brief on Thursday in favor of a court case challenging health care reform.

In the 16-page brief in a federal case based in Florida (see Court Green Lights FL HCR Challenge) McConnell argues that a key part of the new health care law – the requirement that all individuals have health insurance – is unconstitutional.  

“Where, as in this case with respect to the [health bill]’s individual mandate, Congress legislates without authority, it damages its institutional legitimacy and precipitates divisive federalism conflicts like the instant litigation,” McConnell wrote in the filing, according to The Hill. “The long term harms that the PPACA may do to our governmental institutions and constitutional architecture are at least as important as are the specific consequences of the PPACA.”  

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GOP Senators who didn’t sign the brief are: Lamar Alexander (R-Tennessee), Scott Brown (R-Massachusetts), Robert Bennett (R-Utah), Lindsey Graham (R-South Carolina), Judd Gregg (R-New Hampshire), Richard Lugar (R-Indiana), Lisa Murkowski (R-Alaska), Jeff Sessions (R-Alabama), George Voinovich (R-Ohio).

The Hill said no Republican senators-elect signed onto the amicus curiae filing since the brief is an official Senate communication and none of the new members are sworn in. 
  

The brief is here.

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