IRS modernizes tax filings for startups following Carta’s coalition petition

Author:

The Carta Team

|

Read time:

2 minutes

Published date:

October 24, 2023

Following a years-long coalition petition by Carta, the IRS changed 83(b) election procedures to permanently allow submission with e-signatures.

This month, the IRS announced it would change 83(b) election procedures to permanently allow submission with e-signatures. This change will help founders and employees take advantage of a critical tax incentive intended to support employee ownership.

Amid the challenges of the COVID-19 pandemic, the IRS temporarily allowed taxpayers to electronically sign specific documents, including 83(b) elections, which enable founders and employee-owners to accelerate a portion of their tax liability on equity ownership to the date they acquired their shares. This e-signature allowance was set to expire on October 31, 2023.

On October 6, Carta and 32 signatories* sent a letter to the IRS urging them to make e-signatures for the 83(b) elections permanent. This week, the IRS officially formalized 83(b) e-signature allowance in its Internal Revenue Manual.

“This election is crucial for founders and employee-owners, as it enables them to accelerate the taxation of equity ownership to the date they are granted the shares, which can result in significant tax savings,” said Amy Miller, public policy director at Carta. “The decision marks an important milestone in modernizing IRS procedures.”

The coalition commends the IRS’s decision to extend this solution to founders and employee owners.

Read the full coalition comment letter to the IRS here

*Signatories include:

500 Global

Capital Factory

Carta, Inc.

Cooley LLP

Croke Fairchild Duarte & Beres LLC

Davis Polk & Wardwell LLP

Engine

Fenwick & West LLP

gener8tor

Goodwin Procter LLP

Gunderson Dettmer Stough Villeneuve Franklin & Hachigian LLP

Johnson & Oshan Law PLLC

Koenig, Oelsner, Taylor, Schoenfeld & Gaddis PC

Latham & Watkins LLP

Lowenstein Sandler LLP

Mayer Brown LLP

McDermott Will & Emery LLP

Mintz, Levin, Cohn, Ferris, Glovsky & Popeo PC

Morrison & Foerster LLP

National Venture Capital Association

Optimal Counsel LLP

Orrick Herrington & Sutcliffe LLP

Perkins Coie LLP

Plug and Play

Sidley Austin LLP

Silicon Legal Strategy PC

Simpson Thacher & Bartlett LLP

Stripe, Inc.

Tribe Capital Management LLC

Union Square Ventures

Vela Wood PC

Wilmer Cutler Pickering Hale & Dorr LLP

Y Combinator Management LLC

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