Form 8937 Instructions: Covered Actions, Deadlines, and Penalties

If your company issues stock, bonds, or other specified securities and takes an action that changes holders’ cost basis, Form 8937 filing requirements apply: you must report the action to the IRS or post the completed form on your public website within 45 days, or by January 15 of the year following the action, whichever comes first.¹ You also have to get the same information to every affected holder. Miss either piece and the penalties climb to $340 per return in 2026, capped above $4 million for larger issuers.²

Who Has to File

The obligation sits with the issuer of the security. Not the broker, not the shareholder. Domestic and foreign corporations, real estate investment trusts, regulated investment companies, and any other entity that issues specified securities to U.S. taxpayers are all covered.³ Being organized outside the United States doesn’t get a foreign issuer off the hook when U.S. taxpayers hold the securities, whether directly or through depositary receipts.

One shortcut: RICs and REITs that already report undistributed capital gains on Form 2439 can rely on that filing to satisfy Form 8937 for those same gains, provided the 2439 goes to every proper party on time.⁴

Which Securities Are Covered

Form 8937 reaches only “specified securities,” and the category is narrower than it sounds. It includes:

Corporate stock, meaning any share in an entity organized or treated as a corporation for federal tax purposes.
Interests treated as stock, including American Depositary Receipts.
Options, warrants, and stock rights as described in the applicable Treasury Regulations.
Securities futures contracts.
Most debt instruments, though certain short-term obligations and debt under Section 1272(a)(6) are excluded.

Partnership interests are not on the list.³ Partners get their basis information through Schedule K-1 instead. If your entity only issues partnership interests, Form 8937 doesn’t apply to you.

Debt phased in over time. For straightforward fixed-rate, fixed-term debt, reporting covers organizational actions occurring after 2013. For more complex debt — variable-rate, contingent-payment, convertible, payment-in-kind, and inflation-indexed instruments — the requirement applies to actions after 2015.⁴

Which Actions Trigger a Filing

An “organizational action” is any event the issuer initiates that changes the basis a holder has in the security. The common ones: stock splits, reverse splits, mergers, acquisitions, recapitalizations, and nontaxable stock distributions.⁴ A cash distribution that exceeds the issuer’s earnings and profits also triggers filing, because the excess reduces basis rather than being taxed as a dividend. Spin-offs are a frequent trigger too, since parent-company shareholders have to allocate their original basis between the parent and the new entity.

Conversion-rate adjustments on convertible debt can trigger reporting when they produce a deemed distribution under Section 305(c).⁴

The 1099-DIV Carve-Out

If the distribution is reportable as a dividend on Form 1099-DIV, do not put it on Form 8937.⁴ The two forms don’t overlap. When a distribution splits between a taxable dividend and a return of capital, the dividend portion goes on 1099-DIV and the basis-reducing return of capital portion goes on 8937.

What Goes on the Form

Form 8937 has three parts. The first two are identification; the third is where the work lives.

Part I asks for the issuer’s legal name, mailing address, taxpayer identification number, and a contact person with a phone number. The contact matters because the IRS and brokers may need to follow up.

Part II identifies the specific security — name, class (common, preferred, debt, and so on), CUSIP number, and total quantity outstanding at the time of the action. The CUSIP is essential for brokers matching your filing to their records.

Part III is the demanding part and the section where most errors occur. You provide a narrative description of the action, the date it happened, and a detailed explanation of how it changed basis for each affected security. “Basis was adjusted” won’t do; the description needs enough specificity that a shareholder or their tax advisor could apply the adjustment directly. You also report the quantitative effect: the actual dollar amounts or percentages by which basis changed, along with the tax code sections that govern the action and the methodology behind the numbers.

For a stock split the math is simple. For a spin-off or partial redemption, expect independent appraisals, allocation formulas, and coordination with counsel. If the final numbers aren’t available before the deadline, you may file using reasonable assumptions, but a corrected return has to follow within 45 days of learning the actual figures.⁴ This comes up often with return-of-capital distributions, where the final earnings-and-profits calculation isn’t ready until well after the distribution.

When It’s Due

Form 8937 is due by the earlier of 45 days after the organizational action or January 15 of the year following the calendar year in which the action occurred.¹ An action in March gives you 45 days. An action in mid-December runs up against January 15 first.

You can also file before the action if the quantitative effect on basis is already known. Announced stock splits with a fixed ratio are the usual candidate.⁴

Statements to holders and nominees are due by January 15 of the year following the action. For redemptions, the deadline is tied to the last day a holder can redeem.⁴

How to Submit: IRS Filing or Website Posting

Posting on your website is an alternative to filing with the IRS, not an addition. If you post a completed, signed Form 8937 by the due date in a readily accessible area of your primary public website dedicated to that purpose, you don’t have to file the form with the IRS separately.⁴ The statute lets the IRS waive both the filing and the holder-notification requirements when the issuer makes the information publicly available.¹

Choose the website route and the posted form has to stay accessible for 10 years. If your company goes through a succession or reorganization during that period, the form must remain available on the successor’s primary website for the rest of the term.⁴

Issuers that go the IRS route mail the form to the address in the form instructions for information returns. Most publicly traded issuers use the website posting because a single action satisfies both the filing and the holder-notification requirements.

Getting the Information to Holders

However you file, the information has to reach every holder of record as of the date of the action, plus every subsequent holder of record up to the date you send the form. Where the security is held in a nominee’s name on your books, the nominee gets the information instead of the underlying holder.⁴

You can satisfy this by sending a copy of the completed Form 8937, or by providing a written statement with the same information that notes the data is being reported to the IRS. Delivery can be by mail or, with holder consent, electronic. And as noted, a public website posting handles the holder notification at the same time it satisfies the IRS filing.⁴

Correcting a Filed Form

If you learn that the quantitative effect on basis differs from what you originally reported — a common outcome when you filed on reasonable assumptions — a corrected Form 8937 is due within 45 days of that determination.⁴

The correction mirrors the original filing. Filed with the IRS? Submit the correction to the IRS. Posted to your website? Update the posted version. Either way, notify all holders and nominees that the earlier information was wrong and provide the revised basis data. The corrected form has to remain accessible for the full 10-year period.

Penalties

Form 8937 penalties come out of the same information-return framework that governs 1099s and W-2s. Section 6721 covers failures to file with the IRS; Section 6722 covers failures to furnish correct statements to holders.⁵ The per-return amounts are the same under both.

For returns due in 2026, the tiers for larger issuers (average annual gross receipts over $5 million) are:²

Corrected within 30 days of the due date: $60 per return, capped at $683,000 per year.
Corrected after 30 days but by August 1: $130 per return, capped at $2,049,000.
Not corrected by August 1: $340 per return, capped at $4,098,500.
Intentional disregard: $680 per return, no cap.

Smaller issuers (average annual gross receipts of $5 million or less) pay the same per-return amounts but face lower annual caps of $239,000, $683,000, and $1,366,000 across the three correction windows.²

Reasonable Cause Relief

The IRS can waive the penalty if you show reasonable cause. That means demonstrating two things: you acted responsibly both before and after the failure, and mitigating factors or circumstances beyond your control contributed to it. Acting responsibly covers requesting extensions where possible, taking steps to prevent foreseeable failures, and correcting errors promptly. Mitigating factors include being a first-time filer of the form, a clean compliance history, or lost access to relevant business records.⁶ Determinations are case-by-case, and the issuer carries the burden of proof.

1
Office of the Law Revision Counsel. 26 U.S. Code 6045B – Returns Relating to Actions Affecting Basis of Specified Securities
2
Internal Revenue Service. IRM 20.1.7 Information Return Penalties
3
Internal Revenue Service. Instructions for Form 8937 (12/2017)
4
Internal Revenue Service. Instructions for Form 8937 – Report of Organizational Actions Affecting Basis of Securities
5
Office of the Law Revision Counsel. 26 U.S. Code 6721 – Failure to File Correct Information Returns
6
Internal Revenue Service. Penalty Relief for Reasonable Cause