When a startup grants you stock that vests over time - the classic four-year founder or early-employee grant - the default tax rule treats each vesting chunk as compensation income at whatever the shares are worth when they vest. If the company takes off, that means a growing tax bill on shares you cannot yet sell.
Section 83(b) of the tax code offers the alternative. By filing an election, you choose to include the property's fair market value at the time of the transfer - minus whatever you paid for it - in your gross income right away. Founders who buy their restricted stock at formation for a nominal price typically report little or no immediate income, and later appreciation is then handled when the shares are sold rather than taxed as compensation at every vesting date.
The 30-day deadline is absolute
The IRS instructions for Form 15620 state the election must be filed no later than 30 days after the date the property is transferred. There is no extension mechanism. The only accommodation is the standard rule for deadlines that land on a Saturday, Sunday or legal holiday: the election counts as timely if it is postmarked by the next business day. Miss the window and the election is simply unavailable - the default vesting-date taxation applies.
How to file
The IRS introduced Form 15620, Section 83(b) Election, as a dedicated form for this filing; the current revision is dated April 2025. Using it is optional - the instructions say an election can also be made with a written statement that satisfies the requirements of Treasury Regulation 1.83-2. The form itself asks for the property description and quantity, the transfer date, the restrictions on the property, fair market value, the amount paid, and the difference to include in income.
Filing is on paper: the completed, signed form goes by mail to the IRS office where the person performing the services files their federal income tax return. Two copies travel with it in practice - the person performing the services must also give a copy to the person for whom the services are performed (your company), and to the transferee of the property if that is someone other than the taxpayer.
It cannot be undone
The form's instructions are explicit: an 83(b) election may not be revoked except with the consent of the IRS, citing Treas. Reg. 1.83-2(f) and Revenue Procedure 2006-31. If you leave the company before vesting, you do not get back tax you already paid on shares you forfeit. That tradeoff - pay a little tax now on nearly worthless stock, and accept the risk the stock stays worthless - is why founders file early and why the election is usually signed the same week as the stock purchase agreement.
A note on the paperwork itself: the IRS updated Publication 525 to reflect that the choice can be made by filing a written statement or Form 15620 with the IRS center where you file your return. Once the election is in, the property is out of the compensation-at-vesting track - the form describes the election as including the value at transfer "rather than when the property later becomes substantially vested."
Both employees and independent contractors can make the election when they receive substantially nonvested property in connection with services. Keep proof of mailing - the deadline is measured by what you can show, not what you remember.