USPS Postmark Rule Change: Implications for Section 83(b) Elections
For startup founders seeking to reduce their potential tax exposure through a Section 83(b) election, timing matters. A recent change in U.S. Postal Service (USPS) postmarking procedures has introduced new risk for anyone relying on traditional “snail” mail to meet their Section 83(b) election filing deadlines.
Below we explain what changed at USPS, what a Section 83(b) election is, how it must be filed, and what founders should do to avoid costly mistakes.
What Is the New USPS Postmark Change?
On December 24, 2025, USPS implemented new procedures for dating mail. Under the updated procedures, physical mail is now postmarked based on when it is processed at a USPS facility, and not when it is dropped into a mailbox or post office receptacle as was previously the case. This means there can be a gap (sometimes multiple days) between when a sender deposits mail and the official postmark date that appears on the envelope.
For time-sensitive filings, such as Section 83(b) elections in connection with a grant of restricted stock or the early exercise of a stock option, this change increases the risk that such a filing mailed “on time” could nonetheless receive a postmark dated after the applicable deadline.
What Is a Section 83(b) Election?
A Section 83(b) election is a tax election available under Section 83(b) of the Internal Revenue Code that allows a recipient of restricted stock or other property that is subject to a substantial risk of forfeiture to be taxed at ordinary income tax rates at the time the stock or other property is received, rather than as it vests over time, or as the risk of forfeiture lapses.
Startup founders and early employees typically receive restricted stock subject to vesting or a repurchase right that lapses over some predetermined period of time (typically four years and/or upon the achievement of certain “milestones”). Without a timely filed Section 83(b) election electing to be taxed in the year of grant (often at a much lower valuation), the IRS taxes the recipient as the stock vests (or the restrictions lapse) over time (often at higher valuations as the stock appreciates in value). Filing a Section 83(b) election allows the recipient to include the stock’s current (often nominal) value as taxable income upfront and consider the future appreciation of the stock as capital gain rather than ordinary income. For more information about why founders should consider filing Section 83(b) elections for grants, please see our article on Why Startup Founders Should File an 83(b) Election.
What Are the Requirements for Filing a Section 83(b) Election?
The requirements for filing a valid Section 83(b) election are rigid:
Failure to comply with these requirements can invalidate the election entirely and result in greater tax exposure for the recipient. Failing to comply with these requirements may also require employers to withhold, report, and remit tax as shares vest or the restrictions lapse. For more information about Section 83(b) election filing requirements and the relatively new option to file electronically, please see our article on Equity Compensation: E-Filing Section 83(b) Elections.
How Does the USPS Change Impact 83(b) Filings?
The USPS postmark change directly affects founders who mail paper Section 83(b) elections. Because the IRS deadline is based on when the election is filed, a delayed postmark can invalidate the election.
Under the new USPS procedures, dropping a Section 83(b) election into a mailbox on day 30 no longer guarantees a day-30 postmark. If the mail is not processed until day 31 or later, the IRS will treat the election as late, and therefore invalid, which can significantly impact founders’ tax liability.
What Should Founders Do Differently in Light of This Change?
In light of the USPS change and the availability of electronic filing, founders should consider the following:
Takeaways
The recent USPS postmark policy change may seem like a minor operational update, but for founders filing Section 83(b) elections, it can have extreme negative tax consequences. With electronic filing now available and mail postmarks no longer tied to drop-off dates, the safest approach for founders is to file early and either file electronically or file by Certified Mail with Return Receipt Requested.
This article is provided for informational purposes only and does not constitute legal or tax advice. Taxpayers should consult their own advisors regarding their specific circumstances.
Below we explain what changed at USPS, what a Section 83(b) election is, how it must be filed, and what founders should do to avoid costly mistakes.
What Is the New USPS Postmark Change?
On December 24, 2025, USPS implemented new procedures for dating mail. Under the updated procedures, physical mail is now postmarked based on when it is processed at a USPS facility, and not when it is dropped into a mailbox or post office receptacle as was previously the case. This means there can be a gap (sometimes multiple days) between when a sender deposits mail and the official postmark date that appears on the envelope.
For time-sensitive filings, such as Section 83(b) elections in connection with a grant of restricted stock or the early exercise of a stock option, this change increases the risk that such a filing mailed “on time” could nonetheless receive a postmark dated after the applicable deadline.
What Is a Section 83(b) Election?
A Section 83(b) election is a tax election available under Section 83(b) of the Internal Revenue Code that allows a recipient of restricted stock or other property that is subject to a substantial risk of forfeiture to be taxed at ordinary income tax rates at the time the stock or other property is received, rather than as it vests over time, or as the risk of forfeiture lapses.
Startup founders and early employees typically receive restricted stock subject to vesting or a repurchase right that lapses over some predetermined period of time (typically four years and/or upon the achievement of certain “milestones”). Without a timely filed Section 83(b) election electing to be taxed in the year of grant (often at a much lower valuation), the IRS taxes the recipient as the stock vests (or the restrictions lapse) over time (often at higher valuations as the stock appreciates in value). Filing a Section 83(b) election allows the recipient to include the stock’s current (often nominal) value as taxable income upfront and consider the future appreciation of the stock as capital gain rather than ordinary income. For more information about why founders should consider filing Section 83(b) elections for grants, please see our article on Why Startup Founders Should File an 83(b) Election.
What Are the Requirements for Filing a Section 83(b) Election?
The requirements for filing a valid Section 83(b) election are rigid:
- Timing: The election must be filed no later than thirty (30) days after the date the restricted stock is transferred to the taxpayer. This deadline is absolute, and no extensions are available.
- Form and content: The filing must include specific information, such as a description of the property (i.e., the restricted stock), the date of transfer, the nature of any restrictions, the fair market value of the stock, and the amount paid, if any.
- Delivery method: Historically, the election was filed by mailing a signed statement to the IRS. While electronic filing is now permitted, mail filing using either a Form 15620 or a custom Section 83(b) election remains available in all circumstances. Additionally, the taxpayer must furnish a copy of the filed Section 83(b) election to the company for which the taxpayer is providing services (i.e., the taxpayer’s employer).
Failure to comply with these requirements can invalidate the election entirely and result in greater tax exposure for the recipient. Failing to comply with these requirements may also require employers to withhold, report, and remit tax as shares vest or the restrictions lapse. For more information about Section 83(b) election filing requirements and the relatively new option to file electronically, please see our article on Equity Compensation: E-Filing Section 83(b) Elections.
How Does the USPS Change Impact 83(b) Filings?
The USPS postmark change directly affects founders who mail paper Section 83(b) elections. Because the IRS deadline is based on when the election is filed, a delayed postmark can invalidate the election.
Under the new USPS procedures, dropping a Section 83(b) election into a mailbox on day 30 no longer guarantees a day-30 postmark. If the mail is not processed until day 31 or later, the IRS will treat the election as late, and therefore invalid, which can significantly impact founders’ tax liability.
What Should Founders Do Differently in Light of This Change?
In light of the USPS change and the availability of electronic filing, founders should consider the following:
- File electronically whenever possible. The IRS now permits electronic filing of Section 83(b) elections through its online system using a Form 15620, providing immediate confirmation of receipt and eliminating any postmark uncertainty. However, there may be circumstances where an electronic filing is not possible or is burdensome.
- Avoid mailbox drop-offs. If mail filing is required, founders should consider in-person USPS acceptance with proof of mailing, such as certified or registered mail, rather than relying on standard mailing or blue mailboxes. We have long advised clients to use Certified Mail with Return Receipt Requested, and the USPS change escalates the importance of that advice.
- Don’t wait until the deadline. Whether filing electronically or by mail, founders should aim to complete Section 83(b) elections well before the 30-day deadline.
- Consult advisors early. Because Section 83(b) elections are technical and time-sensitive, founders should coordinate closely with legal and tax advisors at the time equity is issued. This allows founders to anticipate their equity grant workflows and plan accordingly.
- Document, document, document. Keeping good records of a timely filed Section 83(b) election has become even more critical. Founders should retain (a) copies of the filed Section 83(b) election, (b) proof of the date filed (a downloaded copy of the Section 83(b) election filed electronically, IRS confirmation or USPS acceptance receipt) and (c) proof that a copy of the Section 83(b) election was provided to the company.
Takeaways
The recent USPS postmark policy change may seem like a minor operational update, but for founders filing Section 83(b) elections, it can have extreme negative tax consequences. With electronic filing now available and mail postmarks no longer tied to drop-off dates, the safest approach for founders is to file early and either file electronically or file by Certified Mail with Return Receipt Requested.
This article is provided for informational purposes only and does not constitute legal or tax advice. Taxpayers should consult their own advisors regarding their specific circumstances.