Taxes on ESPPs are levied when you sell your stock--both as compensation income and as capital gains.
Your employer purchased stock on your behalf and you should have received Form 3922 -- "Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)". This form is purely informational, but is important for record-keeping.
When you sell the stock, the company will send a 1099-B, as any broker would. Any discount received on the initial purchase or other funds deemed "compensatory" will then be reported as income on your W-2 for that tax year.
That income on your W2 is part of the basis you need to be sure is reported when you enter the 1099-B. It is often not included in the basis listed on the 1099-B. It could be, so be careful and use your form 3922 and w2 to determine your correct basis.
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