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How to file a section 83(b) election filing to the IRS as a beginner C-corp founder

Lots of hopeful entrepreneurs are starting businesses everyday. Some chose to register an LLC but many of us create c-corps with the hopes of raising funds and attracting talented staff.

Filing your section 83(b) election and ITIN tax application return.

One of the first things one has to do when joining a startup is filing a Section 83(b) election. I ran into some road bumps while trying to get my affairs in order. So, I thought I’d share what I’ve come to understand.

How I messed up my section 83(b) election filing to the IRS?

So I registered a tech startup not too long ago. I did this through a platform and not through an actual person. This is what made things difficult for me.

One of the things I had to do after opening a company bank account was buying my equity and then needing to file what is called a Section 83(b) election. I didn’t even understand what that would entail. 

When I contacted support later after bumping into hurdles, they told me that they aren’t lawyers and couldn’t give me legal advice. They then tried to up-sell me on some legal services that are also platform based.

So, I ended up having literal sleepless nights and the worst Easter Weekend ever. This was all because the instructions were confusing and this was my first Section 83(b) Election.

What is a section 83(b) election?

A section 83(b) election a form telling the IRS that you don’t want the future appreciated (but unrealized and not yet vested) value of your shares to be counted towards taxable income. Imagine suddenly being rich on paper and owing the IRS a crazy amount of money? This is basically ethical tax avoidance to prevent future suffering.

Note: It is important to file your Section 83(b) election form within 30 days of receiving restricted property. Failure to timely file the election could result in adverse tax consequences.

Find the proper legalese here. That page also includes a form.

How to file or mail a section 83(b) election form with a W-7 form?

Fill out your W-7 Form and make photocopies

Fill out your W-7 form on your phone using the Adobe Fill & Sign App, in case you make mistakes on the form. Then when you are 100% happy with the form, print it out and sign it and date it with a pen. Make a copy of this for your records.

Fill out Section 83(b) Election and sign it.

You can get a Section 83(b) form with instructions here. Fill out the form using Adobe Fill & Sign and print it. Make sure to make copies of your Section 83(b) election forms so you have copies.

Put the forms together for the IRS

Staple the original signed Section 83(b) election to the W-7 form.

Get certified copies of your passport from the USA consulate office.

You will need certified copies to send with your W-7. Make sure you make an appointment with the American consulate office to have your passport certified, so you don’t have to post your whole passport to the IRS.

Get your self-addressed envelope ready

Buy an envelope and enough international stamps to cover international postage. Write your name and mailing address On the envelope and stick the stamps on.

Put the Section 84(b) election with the self-addressed envelope

Staple one copy of your Section 83(b) election form to the envelope with your return address. This will be your proof of timely filing.

Put both your signed forms including your certified passport copy into one big envelope.

Put the original Section 83(b) election that’s stapled in front of the W-7 form, plus your certified passport copy, plus the copy of the copy election form that’s been stapled to an envelope into a bigger envelope.

Mail your section 83(b) election with your W-7 form correctly.

Go to only DHL, FedEx, UPS (no one else unless it’s certified post office mail) and put the envelope with the return envelope with copy of section 83(b) election form, original section 83(b) form, W-P form, certified passport copy, copy of section 83(b) election attached to return envelop, into a DHL envelope to deliver to the USA. The mailing receipt will be your proof of timely filing.

Section(b) elections have deadlines, so how to mail forms on time?

Having a guaranteed proof of timely filing is I said to only ever use DHL, FedEx, UPS or certified mail when posting your tax forms or returns. I didn’t understand this and thought that mail had to arrive at the IRS by the deadline.

Even if the mail arrives much later, as long as you have put any mail into the postbox before the deadline, the IRS accepts it as being mailed on time, based on your local time zone.

So if you make sure you have mailing receipts for sending the package to the IRS before midnight, you’re good. But used only DHL, FedEx, UPS or certified postal mail with receipts.

CritiqueBabe’s final thoughts on filing a section 83(b) election

I didn’t know all of this and I spent 2 weeks on google and YouTube trying to understand the whole process. I hope this article on critiquebabe.com helps at least one person.

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