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Form 8876: Excise Tax on Structured Settlement Factoring Transactions
IRS Form 8876 is used to report and pay the 40% excise tax imposed on the factoring discount of a structured settlement factoring transaction. File this form by the 90th day following receipt of payment rights.
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IRS Form 8876 - Excise Tax on Structured Settlement Factoring Transactions
IRS Form 8876 is used to report and pay the 40% excise tax imposed on the factoring discount of a structured settlement factoring transaction. File this form by the 90th day following receipt of payment rights.
Risk Radar
Scan points- 1Do not file if the transfer was approved in advance within a qualified order, as no excise tax is due.
- 2Filing without a separate return for each date of structured settlement payment rights received.
- 3Failing to round all amounts consistently if cents are dropped or increased on the return.
- 4Not including cents when adding two or more amounts before rounding the total.
- 5Forgetting to attach an explanation if reasonable cause exists for late filing.
Plain English
This form tells the IRS about transactions where someone bought the right to receive money from a structured settlement—a legal agreement that pays out over time. By filing Form 8876, filers report these sales and pay the required 40% excise tax on the amount they received.
Submission Date
- Filing date: 2026-01-14 11:10:44
- 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 acquiring, directly or indirectly, structured settlement payment rights in a structured settlement factoring transaction entered into after February 21, 2002.
- Do not use Form 8876 if the transfer of structured settlement payment rights was approved in advance in a qualified order, as no excise tax is due.
- Check Form 7004 instead when you need more time to file Form 8876.
Form selector
Use this form or another form?
Filing extension for the deadline
You must file this form by the due date of Form 8876, but it does not extend the time for tax payment.
✓ Check the instructions for Line 5 on Form 8876.
Making an electronic payment
The IRS recommends paying electronically, and direct deposit fields are added to lines 7b, 7c, and 7d.
✓ Confirm your payment method aligns with the options listed in the instructions.
Applying for a Preparer Tax ID Number (PTIN)
You can apply online or by filing this form when using a paid preparer on Form 8876.
✓ Ensure you record the PTIN correctly on Line 7 of Form 8876.
Deadline or filing window
The trigger event for filing Form 8876 is receiving structured settlement payment rights. The deadline is strictly the 90th day following that receipt date. If more time is needed, an extension must be filed using Form 7004 by the original due date.
Checklist
What you need before filling it out
Total undiscounted amount
The total undiscounted amount of structured settlement payments being acquired · Form 8876 Line 1
Factoring discount
Subtract Line 2 (Amount paid) from Line 1 (Undiscounted amount). · Form 8876 Line 3
Tax due
Multiply Line 3 (Factoring discount) by 40% (0.40). · Form 8876 Line 4
Less: Tax paid with Form 7004
The amount of tax paid when filing an extension application using Form 7004 for this date's payment rights. · Form 8876 Line 5
Payment instructions
Electronic payments include EFTPS and Same-day wire options, with direct deposit fields on lines 7b, 7c, and 7d. · Instructions p.2
Before you submit
- 1Verify the form is using the December 2025 revision.
- 2Confirm that Line 1 reflects the total undiscounted amount of structured settlement payments being acquired.
- 3Ensure Line 3 (Factoring discount) correctly equals Line 1 minus Line 2.
- 4Check that Line 4 (Tax) is exactly 40% of the amount on Line 3.
- 5Verify Line 5 accurately reflects any tax paid when filing Form 7004 for this transaction date.
- 6Confirm all cents are rounded to whole dollars, dropping amounts under 50 cents and increasing amounts from 50-99 cents (e.g., $1.39 becomes $1).
- 7If making a payment, ensure the direct deposit information on lines 7b, 7c, and 7d is complete.
How to file this form
- 1Calculate Line 3 by subtracting the Total amount paid (Line 2) from the Total undiscounted amount (Line 1).
- 2Determine the Tax due on Line 4 by multiplying the Factoring discount (Line 3) by 40%.
- 3Subtract any previously paid tax (if applicable) onto Line 5, which is "Less: Tax paid with Form 7004".
- 4Send the completed Form 8876 to the Internal Revenue Service Center in Kansas City, MO 64999–0019.
- 5If paying electronically, submit payment via EFTPS or use the direct deposit fields (Lines 7b, 7c, and 7d) if there is an overpayment on Line 7a.
Known limitations
- 1Do not file Form 8876 if the transfer of structured settlement payment rights was approved in advance in a qualified order, as no excise tax is due.
- 2A separate Form 8876 must be filed for each date on which structured settlement payment rights were received in one or more structured settlement factoring transactions.
- 3The form applies to transactions entered into after February 21, 2002, provided the filer acquires structured settlement payment rights directly or indirectly.
Field map
Compact field-by-field guide
Entity Info
1 items
Name and taxpayer ID of the entity claiming the credit.
Credit Info
1 items
Type of credit or incentive being claimed.
Calculation
2 items
The base amount used to calculate the credit.
Calculated credit amount after applying formulas and limitations.
Certification
1 items
Detailed breakdown supporting the credit calculation.
Signatures
1 items
Sign and date the form.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition of IRS Form 8876 is Revision December 2025, and users should check IRS.gov/Form8876 for the latest information regarding developments or instructions.
What changed or needs a fresh check
- Edition date — confirm the revision date reads December 2025.
- Form number — confirm the form is IRS Form 8876.
- Mailing address — confirm the recipient is Internal Revenue Service Center, Kansas City, MO 64999–0019.
- Signature — ensure a signature is provided on Line 5 and Date is entered.
- Tax amount — confirm that Line 4 (Tax) is calculated by multiplying Line 3 (Factoring discount) by 40% (0.40).
- Payment method — if paying electronically, verify the payment type matches EFTPS or Same-day wire.
Quick Facts
Downloads
After you file
- 1Retain a copy of Form 8876 when filing it.
- 2If an overpayment exists on line 7a, enter direct deposit information on lines 7b, 7c, and 7d for refunds.
- 3To correct a previously filed return, file a corrected Form 8876 and write “Amended” at the top of the form.
- 4If interest is charged due to late payment, it applies to taxes not paid by the due date at a rate determined under section 6621.
Sources
- SRCInstructions p.1 — The purpose of Form 8876 is to report and pay the 40% excise tax imposed under section 5891 on the factoring discount of a structured settlement factoring transaction.
- SRCInstructions p.1 — Generally, one must file Form 8876 if they acquire, directly or indirectly, structured settlement payment rights in a structured settlement factoring transaction entered into after February 21, 2002.
- SRCInstructions p.1 — The filing deadline is the 90th day following the receipt of structured settlement payment rights in a structured settlement factoring transaction.
- SRCInstructions p.1 — If more time is needed, file Form 7004 by the due date of Form 8876; Form 7004 does not extend the time for payment of tax.
- SRCInstructions p.2 — Generally, a penalty of 5% a month or part of a month, up to a maximum of 25%, is imposed if Form 8876 is not filed when due (unless reasonable cause exists).
- SRCInstructions p.3 — The required filing address is Department of the Treasury Internal Revenue Service Center, Kansas City, MO 64999–0019.
Common confusion points
When do I need to file Form 8876?
You must file within the 90th day following receipt of structured settlement payment rights in a structured settlement factoring transaction.
→ Confirm the date you received the payment rights.
What if my transfer was approved early?
Do not file Form 8876 because no excise tax is due if the transfer was approved in advance in a qualified order.
→ Check the documentation confirming the approval status of the transfer.
How do I calculate the penalty for being late?
Generally, a late filing incurs a penalty of 5% per month (or part of a month), up to a maximum of 25%.
→ Verify if you have reasonable cause; if so, attach an explanation.
What is the difference between late filing and late payment penalties?
Late filing penalty applies when Form 8876 isn't filed on time; late payment penalty applies when tax isn't paid on time.
→ Check which action occurred relative to the due date.
How do I handle cents when calculating amounts?
If adding two or more amounts, include cents during addition and round off only the total (e.g., $1.39 becomes $1; $2.50 becomes $3).
→ Confirm if you rounded all amounts if rounding to whole dollars.
Where do I send Form 8876?
Send it to Department of the Treasury Internal Revenue Service Center, Kansas City, MO 64999–0019.
→ Double-check that you are not sending it to the address listed for comments.
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⚠ If something goes wrong
- Filing late incurs a penalty generally of 5% per month or part of a month.
Questions about IRS Form 8876
What is IRS Form 8876 used for?
This form tells the IRS about transactions where someone bought the right to receive money from a structured settlement—a legal agreement that pays out over time. By filing Form 8876, filers report these sales and pay the required 40% excise tax on the amount they received.
Who must file IRS Form 8876?
Generally, anyone who acquires, directly or indirectly, structured settlement payment rights in a structured settlement factoring transaction entered into after February 21, 2002 must file Form 8876.
What information does IRS Form 8876 require?
The form collects details about the transactions themselves. Filers report information regarding the structured settlement and the specific factoring transaction(s) on the return.
When is IRS Form 8876 due?
Form 8876 must be filed by the 90th day following the receipt of structured settlement payment rights in a structured settlement factoring transaction. An extension can be requested using Form 7004.
Where do I file IRS Form 8876?
Send Form 8876 to the Department of the Treasury Internal Revenue Service Center located at Kansas City, MO 64999–0019. Electronic payments are encouraged for any tax payment or refund.
How do I complete IRS Form 8876?
To complete Form 8876, first ensure all applicable parts are filled out; cents must be included when adding amounts and rounded only at the total. After completing the required information, an individual or paid preparer must sign the form. If prepared by a paid preparer, they must also provide their PTIN in the designated section.
What happens if IRS Form 8876 is filed incorrectly?
If Form 8876 is not filed when due, a penalty generally of 5% a month (or part of a month), up to a maximum of 25%, is imposed on the net amount due. Failure to pay can result in a separate late payment penalty.
When do I need to file Form 8876?
You must file within the 90th day following receipt of structured settlement payment rights in a structured settlement factoring transaction. Confirm the date you received the payment rights.
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