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Form 4255: Certain Credit Recapture, Excessive Payments, and Penalties
IRS Form 4255 is used to report Certain Credit Recapture, Excessive Payments, and Penalties for taxpayers. This form may be used to report penalty amounts for failure to satisfy PWA requirements for an increased credit or deduction claimed in the current year.
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IRS Form 4255 - Certain Credit Recapture, Excessive Payments, and Penalties
IRS Form 4255 is used to report Certain Credit Recapture, Excessive Payments, and Penalties for taxpayers. This form may be used to report penalty amounts for failure to satisfy PWA requirements for an increased credit or deduction claimed in the current year.
Risk Radar
Scan points- 1Ensure you calculate the emissions tier recapture amount correctly using Form 4255, Part III.
- 2Failing to complete Parts II and III before completing Part I.
- 3Incorrectly apportioning PWA penalties based on EPE ratios (Net, Non-net, or Non-EPE).
- 4Not notifying a transferee taxpayer of a recapture event when a transfer election under section 6418 was made.
- 5Entering the wrong penalty amount from Form 7220 into columns (o) or (p).
Plain English
This form helps a taxpayer adjust their tax bill when certain credits are lost or when penalties must be added back into the calculation. It is used to show recapture events related to investment property, excessive payments, or failures to meet prevailing wage requirements for projects.
Submission Date
- Filing date: 2026-01-08 12:10:39
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when you need to figure the increase in the amount due for certain credit recaptures, excessive payments, excessive credit transfers, or penalty amounts for failure to satisfy Prevailing Wage and Apprenticeship (PWA) requirements.
- Do not use Form 4255 if you are reporting a general change in investment credit but no specific recapture, excess payment, transfer, or PWA penalty is involved.
- Check Form 7220 instead when detailing the underlying Prevailing Wage and Apprenticeship (PWA) requirements that necessitate this form.
Form selector
Use this form or another form?
Disposed of investment credit property before 5 full years after placement in service
Recapture is required because the property was sold within the recapture period.
✓ Check Part I, Column (a) for prior year claim.
Changed the use of qualifying property before 5 full years after placement in service
The change in use triggers a requirement to refigure and potentially recapture investment credit.
✓ Check Part I, Column (b) for Gross elective payment election (EPE).
Reporting penalty related to net EPE amount from Form 7220
Penalty amounts are entered specifically into Column (o)(2) when the failure relates to a net EPE.
✓ Check Instructions p.4 for specific column mapping.
Reporting PWA recapture under Section 48E related to alteration/repair
This form is used to report PWA recapture that occurred during the 5-year period following project placement in service.
✓ Check Instructions p.1, referencing Regulations sections 1.48E-3(e) and 1.48-13(c)(4).
Deadline or filing window
Form 4255 is used in the current tax year when a recapture event occurs. No specific filing deadline date is provided in the instructions, but the form must be completed to account for these events on the corresponding tax return.
Checklist
What you need before filling it out
Purpose of Form
Use to figure increase for credit recaptures, excessive payments, excessive transfers, and PWA penalties · General Instructions
Recapture Requirement (Disposal)
Disposed of investment credit property before 5 full years after placement in service · Investment Credit Recapture Requirements
PWA Penalty Reporting Location
Part I, Columns (o)(1), (o)(2), and (o)(3) · Instructions p.3
Apprenticeship Penalty Reporting Location
Part I, Columns (p)(1), (p)(2), and (p)(3) · Instructions p.3
EPE Recapture Linkage
Column (o)(2) for net EPE amount from Form 7220, Part IV, column (f) · Instructions p.4
Credit Transfer Details
Columns (m)(1) through (3) pertain to excessive credit transfers and recaptures under section 6418 · Instructions p.1
Before you submit
- 1Ensure the revision date reads December 2025.
- 2Confirm all required amounts are entered in Part I, as applicable.
- 3Verify that penalty payments related to prevailing wage failures are reported in columns (o)(1), (o)(2), or (o)(3).
- 4Check if apprenticeship penalties are correctly placed in columns (p)(1), (p)(2), or (p)(3).
- 5If reporting EPE recapture, verify the correct column linkage based on whether the amount is net or non-net from Form 7220.
- 6Confirm that Part I summarizes all necessary prior year credit/deduction amounts.
- 7Attach Form 4255 to your tax return and ensure it has Attachment Sequence No. 172.
How to file this form
- 1Complete the rest of Form 4255 as applicable before completing Part I, referencing instructions for specific calculations.
- 2Enter amounts from prior year(s) returns into the designated section.
- 3Calculate and report the Gross elective payment election (EPE) amount in column (b), noting its relationship to the gross EPE in column (c).
- 4Determine and enter the Net EPE amount in column (d), which serves as a summary figure for Part I.
- 5Sign and date Form 4255 before sending it with your tax return.
- 6Keep a copy of the completed IRS Form 4255 for your records.
Known limitations
- 1Recapture of investment credit does not apply to a transfer resulting from the death of the taxpayer.
- 2Recapture of investment credit does not apply to a transfer between spouses or incident to divorce under section 1041, though a later disposition by the transferee is subject to recapture as if the transferor disposed of the property at that later date.
- 3Recapture of investment credit does not apply to a transaction to which section 381(a) applies (regarding certain acquisitions of assets from one corporation by another).
- 4For partnerships and S corporations, certain amounts on Form 4255 are reported directly on the entity's return: Line 3, columns (m)(1) and (m)(2); Line 3, columns (n)(1), (n)(2), and (n)(3); and Line 3, columns (o)(1), (o)(2), (o)(3), (p)(1), (p)(2), and (p)(3).
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is Revision December 2025, and instructions direct users to IRS.gov/Form4255 for the latest information regarding developments related to Form 4255.
What changed or needs a fresh check
- Edition date — confirm the revision date reads December 2025.
- IRS Form Number — confirm the form number is 4255.
- Mailing address/Entity — confirm the Department of the Treasury, Internal Revenue Service designation.
- Signature — confirmation of signature location is not specified in this excerpt but required generally.
- OMB No. — confirm the OMB control number reads 1545-0123.
Quick Facts
Downloads
After you file
- 1Keep a copy of the filed Form 4255 for your records.
- 2If filing with Form 1065, report specified amounts on Form 1065, line 27 (Other taxes).
- 3If filing with Form 1120-S, report specified amounts on Form 1120-S, line 23c.
- 4When reporting PWA penalties in columns (o)(1) through (p)(3), ensure they are apportioned based on the ratio of EPE, non-net EPE, and non-EPE amounts if applicable.
Sources
- SRCInstructions p.1 — The purpose of Form 4255 is to figure the increase in the amount due for certain credit recaptures, excessive payments, excessive credit transfers, and penalty amounts for failure to satisfy PWA requirements.
- SRCInstructions p.1 — Columns (m)(1) through (3) on Form 4255 pertain to excessive credit transfers and credit transfer recaptures under section 6418.
- SRCInstructions p.1 — Columns (n)(1) through (3) on Form 4255 pertain to excessive payments under section 6417.
- SRCInstructions p.1 — Columns (o)(1) through (3) on Form 4255 pertain to penalty amounts for failure to satisfy the prevailing wage requirements.
- SRCInstructions p.3 — For filing Form 1065, enter the amount from Part I, line 3, column (r) on Form 1065, Schedule J, line 9a.
- SRCInstructions p.4 — If filing Form 1120-S, report specified amounts on Form 1120-S, line 23c.
Common confusion points
What is the difference between an excessive payment and an excessive credit transfer?
The columns (m)(1) through (3) pertain to which specific type of event?
If you are filing Form 1065, where exactly do the amounts from Part I line 3, column (r) go on that form?
How do you calculate the penalty ratio if you have EPE amounts that need apportionment?
What must be entered in Column (a) regarding prior year returns?
If a transfer is due to death, does recapture still apply? If so, what happens later?
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Questions about IRS Form 4255
What is IRS Form 4255 used for?
This form helps a taxpayer adjust their tax bill when certain credits are lost or when penalties must be added back into the calculation. It is used to show recapture events related to investment property, excessive payments, or failures to meet prevailing wage requirements for projects.
Who must file IRS Form 4255?
Taxpayers who claim an increased credit or deduction in the current year, or those experiencing PWA recapture under sections 48 and 48E, must use Form 4255.
What information does IRS Form 4255 require?
The form collects details on various recaptures and penalties. Part I summarizes these amounts, while Parts II and III calculate specific items like emissions tier recapture.
When is IRS Form 4255 due?
Form 4255 may be used to report events occurring in the current tax year. The instructions do not specify a filing deadline date, but it relates to the tax year being reported.
Where do I file IRS Form 4255?
The official source does not list a specific mailing address or service center for Form 4255; routing is implied by the context of the return being filed.
How do I complete IRS Form 4255?
Taxpayers must complete Parts II and III as applicable before completing Part I. Penalty amounts from Form 7220 must be entered into specific columns across Parts I, II, or III based on whether they relate to EPE or apprenticeship failures. The form requires signatures for final submission.
What happens if IRS Form 4255 is filed incorrectly?
Failing to correctly report these amounts can result in an increased amount due on the tax return, as the form figures the increase in the amount due for certain credit recaptures and excessive payments.
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