Form 3921 Guide. December Form 3921 Guide December

Transcription

1 Form 3921 Guide December 2017 Form 3921 Guide December

2 Table of Contents I. Introduction to Form Page 3 IRC Section 6039 and Form 3921 History Who Must File What is Filed II. Form 3921 Requirements... Page 3 III. Filing Deadlines... Page 4 IV. Filing Requirements... Page 5 Electronic Filing Hard-copy (Paper) Filing IRS FIRE System V. Generating Form 3921 Substitute Statements in Shareworks... Page 6 What is Needed to Generate a Form 3921 How to Generate Form 3921 Statements How to Generate a FIRE File Searching for a Tax File Request Uploading to the IRS 2

3 I. Introduction to Form 3921 IRC Section 6039 and Form 3921 Internal Revenue Code (IRC) Section 6039 requires companies to provide participants with Form 3921 for all ISO exercises effected during the preceding calendar year. History In November 2009, the Internal Revenue Service (IRS) issued final regulations relating to the Return and Information Statement Requirements of Section 6039 of the IRC. These requirements mandate that both public and private company employers must provide certain information to current and former participants who exercised Incentive Stock Options (ISOs) in the preceding calendar year. The information is provided using the Form 3921 statement, which is also filed with the IRS. The primary objective of these final regulations is to require companies to furnish participants with sufficient information to calculate their tax obligations upon disposition of the shares acquired from a statutory option regulated under IRC Section 422. Who Must File? This regulation applies to every corporation which transfers to any person a share of stock pursuant to that person s exercise of an ISO described in IRC Section 422(b) in any calendar year. Exception: A Form 3921 is not required for the exercise of an ISO by a participant who is a nonresident alien (as defined in IRC section 7701(b)) and to whom the corporation is not required to provide a Form W-2, for any calendar year within the time period beginning with the first day of the calendar year in which the option was granted to the participant and ending on the last day of the calendar year in which the participant exercised the ISO. What is Filed? As with other types of tax statements, the Form 3921 is generated with three duplicate copies that are used for different purposes: Copy A: Filed with the IRS either (i) electronically (via the IRS FIRE system) or (ii) using hard-copy paper forms Copy B: Issued to the party to whom the shares were transferred, e.g., the person who exercised the ISO Copy C: Retained by the issuing corporation for its records New for tax year 2017: Forms 3921 and 3922 are now available online by completing a fill-in Form. To ease statement furnishing requirements, Copies B and C of Form 3921 have been made fillable online in a pdf format, available at 3

4 II. Form 3921 Requirements For information regarding IRS requirements related to Form 3921, refer to the following: Instructions for Forms 3921 and 3922 Example of Form 3921 The employee information statement requirements may be satisfied by providing individuals with Copy B of each Form 3921, or Employers may satisfy the information statement requirement by use of a substitute statement that complies with the general format and content requirements detailed in IRS Publication NOTE: Shareworks provides a substitute statement for Form 3921, which is allowed as noted above and meets the requirements of IRS Publication When preparing to generate Form 3921 statements for participants, you will need the following: Transmitter Control Code (TCC) required for Copy A (FIRE file) Participant demographics required for Copy A (FIRE file) and Copy B (employee statements) o Social Security Number (SSN) o Home address Federal Tax Identification Number/ Employer Identification Number (TIN/EIN) required for Copy A (FIRE file) and Copy B (employee statements) III. Filing Deadlines For all ISO grants exercised during the preceding calendar year, the deadlines for issuing forms to participants and filing with the IRS are listed below: January 31* March 31* Copy B (for the stockholder) either Form 3921 or a substitute statement must be provided to individuals Copy A (for the IRS) electronic submission to the IRS via the IRS FIRE System *NOTE: Should either of the above dates fall on a weekend or federal holiday, refer to the IRS website for delivery/filing date requirements. With respect to the 2017 tax year, statements must be provided to your participants on or before January 31, The FIRE file must be submitted to the IRS on or before April 2, 2018 (because March 31, 2018 is on a Saturday). If your company requires more time to file Copy A (IRS FIRE file) with the IRS: Complete Form 8809 (Application for Extension of Time to File Information Returns) to file for an automatic 30-day extension. Form 8809 must be filed by the due date of the return. 4

5 New for tax year 2017: Form 8809 is now available online by completing a fill-in Form 8809 through the FIRE system at for an automatic 30-day extension, as well as for an additional 30-day extension. Acknowledgements are automatically displayed online if the request is made by the due date of the statement. If your company requires more time to file Copy B or the substitute statement with the participant Sorry, the IRS does not allow for late delivery of Copy B. The IRS may levy a fine against the corporation responsible for each statement not delivered by January 31 (see the IRS website for more details). IV. Filing Requirements Copy A may be submitted to the IRS either electronically or hard-copy (paper). Electronic Filing Required if there are more than 250 forms/transactions IRS filing deadline: March 31 (for 2018, since March 31 is on a Saturday, the deadline is April 2) Use the IRS FIRE System to file electronically. Hard-copy (Paper) Manual Filing Permitted if less than 250 forms/transactions, although the IRS encourages (prefers) electronic filing even if less than 250 forms/transactions. IRS filing deadline: February 28 *There is no support from Solium for manual filing. 5

6 IRS FIRE System FIRE stands for Filing Information Returns Electronically. To file using the FIRE System you will need: Transmitter Control Code (TCC) o If you do not have a TCC, you will need to request one using Form 4419 (Application for Filing Information Returns Electronically). *This should be requested immediately if you have not done so already. o NOTE: Each company is given one TCC for all of its IRS electronic filings. Before applying for a TCC, be sure to check with your finance and HR departments to see if the company already has a TCC. o New for tax year 2017: Form 4419 is now available online by completing a fill-in Form 4419 through the FIRE system at FIRE account with login credentials (a User ID and Password) o If you do not already have a FIRE account, you can Create New Account at the FIRE site: FIRE file produced from Shareworks 6

7 1. Once you have your User ID and Password, enter them and click Login. 2. Browse for your file and upload it accordingly. You will receive a notification confirming that your upload was successful. V. Generating Form 3921 Substitute Statements in Shareworks Within Shareworks, you can use the Tax File Request (US only) tool to generate Form 3921 substitute statements and the associated IRS FIRE file. Once a Tax File Request has been entered, you can search for and view requests. In addition, once the statements have been generated, you can upload the generated tax statements to participant Shareworks accounts (if available) or download PDF versions for distribution. Instructions on how to generate substitute statements and the IRS FIRE file showing all ISO exercises done by your participants for the relevant tax year are outlined below. What is Needed to Generate a Form 3921 To generate your employee statements, you will need to ensure the following is set up within Shareworks: 1. IRS Transmitter Control Code (TCC) and Federal Tax Identification Number/ Employer Identification Number (TIN/EIN) a. To add/review your TCC and EIN: i. Click on your company name in the top right of Shareworks. ii. Click Edit Company. iii. Scroll to the Tax Slip Business Numbers section at the bottom of the page and enter both your company s IRS Transmitter Control Code (TCC) and EIN in the appropriate field. iv. Click Save to save your changes. b. NOTE: The EIN is required to generate statements. If you are uncertain of your EIN, your Payroll Department may be able to assist. The TCC is required in order for the company to be able to submit the Form 3921 file electronically at the IRS FIRE site. Your Payroll Department may be able to assist you with the TCC number as well. 7

8 2. For participants who have exercised ISOs, you will need to ensure that their SSN and home address are up-to-date. 3. During grant setup, you must also ensure that the Grant Tax Type is set to USA. If the Grant Tax Type is anything other than USA, the Form 3921 statements will not be generated. 4. Transmitter Control Code (TCC) This will be required in order to generate the FIRE file. NOTE: If any of the following applies, a Form 3921 may not be required. Please reach out to your Relationship Manager in such cases for assistance. The company completed a Tender Offer during the year The participant exercised an ISO more than 3 months after his/her termination date The company disqualified the ISO (for whatever reason) prior to exercise 8

9 1. To generate your employee statements, navigate to the Tools tab and select Tax File Request (US Only). Click Request Tax File. 2. The following screen will appear where you will be required to enter the following information: Receipt Parameters i. Tax Year: Enter the year of the Tax File Request. ii. Version: Select either Production or Test (this applies to the FIRE file). The Production file version is used to send to the IRS for evaluation. The Test file version is used to send a test file to the IRS who will provide confirmation that the file format is valid. (Note: The IRS will not process the test files.) iii. Type: Select either Original or Corrected. The Original version is used for the initial generation. If any corrections have been made to exercises through the year after 9

10 original statements have been issued, you will need to generate Corrected employee statements. iv. Category: Select IRS 3921 Statement (for the Statements you will deliver to the participant) or IRS 3921 FIRE (for the file that will be uploaded at the IRS FIRE site). Click Verify Add and then Confirm Add to generate the tax Statements/FIRE file. NOTE: If a participant that exercised ISOs does not have a Social Security Number entered in Shareworks, you will receive an error message. This must be corrected first and the above process repeated to generate the Statement / FIRE file. How to Generate a FIRE File 1. To generate the FIRE file, navigate to the Tools tab and select Tax File Request (US Only). 2. To generate a FIRE file, you will need to review Tax Transmitter and Tax Filer information, which should be set up within Shareworks prior to creating the file. The Tax Transmitter and Tax Filer information are IRS requirements and will be included within the FIRE file. 3. To add a Tax Transmitter and/or Tax Filer, click on the corresponding button: Add Tax Transmitter: The following screen will appear where you will be required to enter the following information: i. Transmitter Control Code (TCC): Enter the TCC for your company. 1

11 ii. TIN Type: EIN, SSN, Individual TIN, Adoption TIN (recommended to use the TIN for your company, i.e., the company s EIN). iii. Transmitter TIN: TIN number that will be included within the FIRE file (recommended to use the TIN for your company). iv. Transmitter Name: Name of the individual who will be generating/submitting the FIRE file. v. Transmitter Name 2 (Optional): Additional space for the transmitter name, if required Correspondence Information: vi. Company Name: Enter the name of your company (as shown on the company tax return filed with the IRS). vii. Company Name 2 (Optional): Additional space for the name of your company, if required. viii. Suite/Street: Enter the street address of your company. ix. Country: Enter the country of your company. x. City: Enter the city of your company. xi. Province/State: Enter the province/state of your company. xii. Postal Code/Zip: Enter the postal code/zip of your company. Correspondence Contact: xiii. Name: Enter the name for the individual who will be filing the FIRE file. xiv. Phone: Enter the phone number for the individual who will be filing the FIRE file. xv. (Optional): Enter the address for the individual who will be filing the FIRE file. 1

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13 Manage Tax Filers: Selecting Manage Tax Filers will allow you to search for individual who have been setup as a Tax Filer. The Tax Filer is the person at the company who will be submitting the file at the IRS FIRE site. To add a new Tax Filer, click on the Add Tax Filer button. The following screen will appear where you will be required to enter the following information: Filer TIN: xvi. EIN/SSN: Enter the appropriate identification number for the filer. xvii. Office Code (Optional) Filer Detail: xviii. Filer Name: Enter the name of the filer. xix. Filer Name 2 (Optional): Additional space for the name of the filer, if required. xx. Suite/Street: Enter the street address of the filer. xxi. Country: Enter the country of the filer. xxii. City: Enter the city of the filer. xxiii. Province/State: Enter the province/state of the filer. xxiv. Postal Code/Zip: Enter the postal code/zip of the filer. Filer Contact: xxv. Click Add Contact to add the contact information for the Tax Filer. 1. Enter the Name and Phone Number of the Tax Filer. b. Click Verify Add and then Save to add the Tax Filer. 12

14 4. Once you have reviewed the Tax Transmitter and Tax Filer information, click Request Tax File. 5. The following screen will appear where you will be required to enter the following information: Request Parameters i. Tax Year: Enter the year of the Tax File Request. ii. Version: Select either Production or Test (this applies to the FIRE file). 13

15 The Production file version is used to send to the IRS for processing and compliance with the filing requirements evaluation. The Test file version is used to send a test file to the IRS who will provide confirmation that the file format is valid. (Note: The IRS will not process the test files.) iii. Type: Select either Original or Corrected. The Original version is used for the initial generation. If any corrections have been made to exercises through the year after original slips have been issued, you will need to generate Corrected employee statements. iv. Category: Select IRS 3921 Statement or IRS 3921 FIRE. Filer Section (this is applicable and will only appear when generating the IRS 3921 FIRE) v. Filer Name: Select from the filer information (setup on the Manage Tax Filers page as described previously). vi. Filer Contact: Select from the filer information (setup on the Manage Tax Filers page as described previously). Click Verify Add and then Save to generate the FIRE file or the 3921 Statements (for participants), as applicable. 14

16 Searching for a Tax File Request To search for a Tax File Request (US Only), go to the Reports tab and click on My Report Pickup Area. You will see the following screen where you have the option to either download PDF copies of the statements or upload them to participant Shareworks accounts (if available). If you would like to obtain the PDF copies of the substitute form, click on the File name (do not click the box to the left of the File name; that box will enable the Delete Report Run button). You will be prompted to save a zip file containing all of the statements. You have now downloaded a list of PDFs for every participant that exercised ISOs during the year. Distribute these documents to your participants by the required deadline. 15

17 Uploading to the IRS Once you have the FIRE file generated from Shareworks, follow the steps below to upload the file to the IRS: 1. Go to fire.irs.gov. 2. Click the Log On link and enter your user name and password. 3. Navigate to the Main Menu and select Send Information Returns. 4. Enter your Transmitter Control Code (TCC) and your Taxpayer Identification Number (TIN), then click Submit. 5. Confirm that the system is displaying the correct contact information. If not, make the required changes. Once all information is correct, click Accept. 6. Under the Choose a File Type heading, choose Original File. 7. On the legalese screen, enter the PIN that was set when the FIRE account was created. If you have forgotten your PIN, call the number on the screen. 8. Once you have your PIN, enter it and click Submit. 9. Browse for your file and upload it accordingly. You will receive a notification confirming that your upload was successful. For additional information regarding requirements for filing using the FIRE system, refer to the IRS website. 16