File the 83(b) Election Before the 30-Day IRS Window Closes

The Signal

A founder issues restricted stock to a new co-founder or early employee — the grant looks generous, everyone shakes hands, and the paperwork goes in a drawer. Nobody files anything with the IRS, because nobody realizes there's a filing. Four years later the stock has vested in full and appreciated ten times over, and the recipient's accountant delivers the number: ordinary income tax on the full vested value, due now, because the 83(b) election that would have locked in the grant-date value was never filed. It had a 30-day window. That window closed years ago, and there is no fixing it after the fact.

Why this matters now

Section 83(b) of the tax code lets someone who receives restricted property — stock subject to vesting, most commonly — elect to be taxed on the value at the time of the grant instead of at each vesting date. If the stock is worth close to nothing at grant (a typical founder or early-employee scenario), the election can mean paying tax on a few hundred dollars now instead of ordinary income tax on a much larger number later, spread across every vesting tranche. The election must be filed with the IRS within 30 days of the grant date. Not 30 business days. Not 30 days from when someone gets around to it. Thirty calendar days, postmarked, no extensions, no late-filing relief. Companies issuing restricted stock to founders, advisors, or early hires on anything other than a fully-vested basis are creating this deadline every time, whether or not anyone on the cap table notices.

The mistake to avoid

The common assumption is that the company's lawyer or the recipient's accountant is handling it, or that it can be cleaned up later if someone forgets. Neither is reliable. The election is the recipient's personal responsibility to file, not the company's, and most outside counsel will tell you that in the engagement letter and then move on to the next closing. If the recipient doesn't know restricted stock carries this clock — and most first-time founders and early hires don't — the 30 days run out quietly. There is no mechanism to request an extension, no private letter ruling that fixes a missed window, and no "we meant to" exception. Treating the grant paperwork as the finish line, instead of the start of a 30-day countdown, is the gap that turns into a five- or six-figure tax surprise at exactly the moment the stock finally becomes worth something.

The restricted-grant audit

Pull every restricted stock or profits-interest grant the company has issued — founders, co-founders, early employees, advisors — and find the actual grant date on each one, not the offer date and not the date the paperwork was signed in principle. For any grant inside the last 30 days, confirm the election was filed or get it filed today; there is no room to wait on this one. For every grant older than 30 days, check whether an 83(b) election was actually filed — a signed form in a drawer doesn't count, it has to have gone to the IRS with proof of mailing or submission. If a grant has unvested shares and no election was filed in time, that person is sitting on an unaddressed future tax bill tied to vesting, not a problem you can refile your way out of. Put the result in writing next to the cap table: who has a filed election, who doesn't, and who is still inside the window.

What stays protected

This is not a reason to slow down equity grants or start routing every hire through outside tax counsel before an offer letter goes out. Keep issuing restricted stock on the timeline the business needs. What changes is a single standing step at grant time: the recipient is told explicitly, in writing, that a 30-day IRS clock starts on the grant date, and that filing is their responsibility, not something the company will absorb if it's missed. That one sentence, attached to every grant going forward, is cheap insurance against a mistake that cannot be corrected after the fact.

The first move

List every restricted stock and profits-interest grant on the cap table with its actual grant date, then separate the list into three buckets: grants inside the current 30-day window, grants where an election was confirmed filed, and grants where filing status is unknown. The third bucket is the one that needs an answer this week, even if the answer is bad news.

The move this week

Build a grant-date tracking line into the equity issuance process itself — the same document or system that generates the grant should flag the 30-day 83(b) deadline and require a yes/no answer on filing status before the grant is considered closed out administratively.