If you’re an employer, you may wonder: Do I still need to file Form 3922 if an employee sells their stock right away? The answer is yes.
What Is Form 3922?
Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c), is an IRS information return. It reports the transfer of stock from the employer to the employee when shares are acquired through an Employee Stock Purchase Plan (ESPP).
👉 The Form 3922 stock sale requirement is based on the transfer of legal title, not how long the employee keeps the stock.
Is Form 3922 Required if the Employee Sells Immediately?
Yes. Even if the employee sells the stock the same day it is purchased, the employer must still file Form 3922.
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The obligation arises when stock ownership transfers to the employee.
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The IRS does not consider whether the employee immediately sells or holds the shares.
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Employers must provide a copy of Form 3922 to the employee and file with the IRS.
Example of Immediate Sale
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An employee buys stock through an ESPP on June 10.
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They sell it the same day for cash.
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The employer still files Form 3922 to report the transfer.
This shows that the Form 3922 stock sale requirement applies in all cases.
Compliance Tips for Employers
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Keep detailed ESPP transaction records.
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File Form 3922 even if stock is sold quickly.
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Use e-file solutions to prevent IRS penalties.
👉 Our Form 3922 software helps businesses e-file Form 3922 accurately and efficiently.
Frequently Asked Questions
1. Why does the IRS require Form 3922 for immediate sales?
Because the requirement is tied to the transfer of ownership, not the sale afterward.
2. What happens if I don’t file Form 3922?
Failure to file can result in IRS penalties for late or missing information returns.
3. Do employees need to do anything with Form 3922?
Employees use it to track ESPP stock basis for their own tax reporting, but the filing duty is on the employer.