Deadlines Approaching for Reporting 2025 ISO Exercises and ESPP Share Transfers

The Internal Revenue Code (the Code), as amended, requires corporations to provide information statements to employees (including former employees) and information filings to the IRS regarding employees’ and former employees’ exercises of incentive stock options (ISOs) and transfers of shares of stock that are purchased under an employee stock purchase plan (ESPP) designed to meet the requirements of Code section 423.¹ To satisfy the information return and statement requirements, companies will need to complete and file Form 3921 for ISO exercises and Form 3922 for ESPP share transfers, as applicable.

Forms and Instructions

Full instructions for Form 3921 and Form 3922 may be obtained on the IRS website. Form 3921 or 3922 must be filed for each applicable stock exercise or transfer. For example, if a company’s employee exercised ISOs in 2025 on two occasions, then it must complete two 3921 forms for that employee.

Each form must contain three copies. Copy A should be sent to the IRS, Copy B (known as the information statement) should be distributed to the employee or former employee whose ISO exercise or ESPP share transfer is being reported,² and Copy C should be retained by the company. Copies B and C of Form 3921 and Copies A and B of Form 3922 are available as fillable PDF forms on the IRS website (see Form 3921 and Form 3922).

If a corporation is required to file 10 or more of either form with the IRS, the filing must be done electronically.³

Electronic filing may be completed through the IRS’s Information Returns Intake System (IRIS). While the IRS’s Filing Information Returns Electronically (FIRE) system remains available for certain filings for the 2025 and 2026 filing seasons, the 2026 tax year (the 2027 filing season) is the FIRE system’s target retirement date, after which IRIS will be the sole intake system for electronic filing of information returns.

Deadlines

For ISO exercises and ESPP share transfers that occurred in 2025, Copy A of the respective form must be filed with the IRS no later than March 2, 2026, if filing on paper, or March 31, 2026, if filing electronically. A 30-day extension of the Copy A deadline may be requested and obtained by filing Form 8809 with the IRS before the original filing deadline. A Form 8809 extension request may be filed electronically through IRIS or the FIRE production system. Copy B of the respective form must be furnished to the applicable employee or former employee by February 2, 2026.⁴

We would like to thank Dasol Lee for their assistance with this alert.

^[1]Code section 6039. ↩
^[2]On Copy B, the copy provided to an employee, it is permissible to truncate an employee’s Social Security number (or other tax ID number) so only the last four digits are visible. However, Copy A must include the full number. ↩
^[3]Note that prior to 2024, electronic filing was required if a company was required to file 250 or more forms. Otherwise, paper filing with the IRS is acceptable. ↩
^[4]Corporations should be aware that a federal tax penalty as high as $340 per information return may be imposed for negligently failing to file a correct Form 3921 and/or Form 3922 by the deadline (unless there is a showing of reasonable cause). ↩

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