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Official form guide
Form 8876: Excise Tax on Structured Settlement Factoring Transactions
IRS Form 8876 is used to report and pay the 40% excise tax on the factoring discount of a structured settlement factoring transaction. It must be filed by anyone who acquires structured settlement payment rights after Feb 21 2002, and is due the 90th day after receipt of those 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 on the factoring discount of a structured settlement factoring transaction. It must be filed by anyone who acquires structured settlement payment rights after Feb 21 2002, and is due the 90th day after receipt of those rights.
Risk Radar
Scan points- 1Missing the 90‑day filing deadline triggers a 5% per month penalty up to 25% of the tax due.
- 2Failing to file Form 8876 within the 90‑day window after receiving payment rights.
- 3Not paying the required 40% excise tax when the form is submitted.
- 4Omitting direct‑deposit information on lines 7b‑7d when an overpayment exists on line 7a.
- 5Filing the form for a transfer that was pre‑approved in a qualified order, which is not required.
Plain English
When a company purchases the right to receive future payments from a structured settlement, it must report that purchase and pay a 40% tax on the discount. This form tells the IRS how much tax is owed and provides the payment details. The filing deadline is 90 days after the rights are 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 you acquire, directly or indirectly, structured settlement payment rights in a structured settlement factoring transaction entered into after February 21, 2002.
- Do not use it when 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 an automatic extension of time to file Form 8876.
Form selector
Use this form or another form?
Filing deadline approaching and need extra time
Provides automatic extension of filing deadline but does not extend payment due date
✓ Confirm extension request is filed by original due date
Preparing the return as a paid tax preparer without a PTIN
PTIN required to sign the return as a paid preparer
✓ Verify PTIN application is approved
Reporting the excise tax on the factoring discount
Calculates 40% tax on discount and submits payment
✓ Ensure lines 1‑4 are completed accurately
Deadline or filing window
The filing deadline starts when the filer receives the structured settlement payment rights. The form must be filed within 90 days of that receipt. If more time is needed, an extension can be obtained by filing Form 7004 by the original 90‑day due date, though the tax must still be paid by that date.
Checklist
What you need before filling it out
Line 1 – Total undiscounted amount of structured settlement payments being acquired
Agreement showing total settlement amount · Form 8876 line 1
Line 2 – Total amount paid for the structured settlement payment rights
Purchase contract or receipt · Form 8876 line 2
Line 3 – Factoring discount (line 1 minus line 2)
Calculation based on lines 1 and 2 · Form 8876 line 3
Line 4 – Tax (40% of line 3)
Tax calculation worksheet · Form 8876 line 4
Lines 7b‑7d – Direct deposit information for overpayment
Bank routing, account number, account type · Form 8876 lines 7b‑7d
Before you submit
- 1Verify the revision date on the form is December 2025
- 2Confirm the filer’s name and identifying number are entered
- 3Enter the total undiscounted settlement amount on line 1
- 4Enter the total paid amount on line 2
- 5Compute the factoring discount on line 3 and ensure it matches line 1 minus line 2
- 6Calculate the tax at 40% on line 4
- 7If an overpayment exists, fill lines 7b‑7d with correct direct deposit details
- 8Review the mailing address to ensure it matches the IRS Center in Kansas City, MO 64999‑0019
How to file this form
- 1Collect the structured settlement agreement and purchase receipt
- 2Fill out Form 8876 lines 1‑4 using the agreement amounts
- 3Enter direct deposit details on lines 7b‑7d if there is an overpayment
- 4Mail the completed Form 8876 to Department of the Treasury, Internal Revenue Service Center, Kansas City, MO 64999‑0019
- 5Keep the mailed envelope receipt as proof of filing
Known limitations
- 1Not required when the transfer of payment rights was approved in advance in a qualified order
- 2Not required for structured settlement factoring transactions entered before February 21, 2002
- 3Not applicable if you are only requesting an extension; use Form 7004 instead
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 form is the December 2025 revision; the instructions direct users to IRS.gov/Form8876 for the latest information.
What changed or needs a fresh check
- Edition date — confirm the revision date reads December 2025
- Fee — not stated in the official source
- Mailing address — confirm address is Department of the Treasury Internal Revenue Service Center Kansas City, MO 64999‑0019
- Signature — not stated in the official source
Quick Facts
Downloads
After you file
- 1Retain a copy of Form 8876 and supporting documents for at least 3 years
- 2Await IRS acknowledgment of receipt, which may arrive by mail
- 3If you made a payment, confirm that the payment was processed on the IRS Payments site
- 4Correct any errors by filing an amended Form 8876 following the instructions
- 5Keep records of any direct deposit refunds received
Sources
- SRCInstructions p.1 — filing deadline is the 90th day following receipt of structured settlement payment rights
- SRCInstructions p.1 — use form when acquiring structured settlement payment rights after February 21, 2002
- SRCInstructions p.1 — do not file when transfer approved in advance in a qualified order
- SRCInstructions p.1 — extension filed with Form 7004 by due date; does not extend payment time
- SRCInstructions p.1 — mailing address is Department of the Treasury Internal Revenue Service Center Kansas City, MO 64999‑0019
- SRCInstructions p.1 — rounding rule for cents to whole dollars
- SRCInstructions p.2 — PTIN application via Form W-12
- SRCForm p.1 — line 4 tax calculation uses 40% (0.40) multiplier
- SRCInstructions p.1 — direct deposit fields added on lines 7b‑7d for overpayment
- SRCInstructions p.1 — electronic payments recommended; use direct deposit
Common confusion points
Do I need to file if I bought rights before 2002?
Misreading the date requirement
→ Check the transaction date is after February 21 2002
Is the 40% tax rate always applied?
Assuming a different rate
→ Verify line 4 uses 0.40 multiplier
Can I round cents on the amounts?
Rounding rules unclear
→ Apply rounding rule: drop <50¢, increase ≥50¢ as described
Do I need a PTIN to file this form?
Confusing preparer requirements with filer requirements
→ Confirm PTIN is only for paid preparers, not the filer
Where do I send the form?
Mixing up comment address with filing address
→ Use Kansas City, MO 64999‑0019 address
What if I need more time to file?
Extension process not obvious
→ File Form 7004 by the original due date
Workflow map
Related forms and next steps
Current
After
Often used with
⚠ If something goes wrong
- File an amended Form 8876 to correct errors
Questions about IRS Form 8876
What is IRS Form 8876 used for?
When a company purchases the right to receive future payments from a structured settlement, it must report that purchase and pay a 40% tax on the discount. This form tells the IRS how much tax is owed and provides the payment details. The filing deadline is 90 days after the rights are received.
Who must file IRS Form 8876?
Anyone who acquires, directly or indirectly, structured settlement payment rights in a factoring transaction entered into after February 21 2002 must file Form 8876, unless the transfer was pre‑approved in a qualified order.
What information does IRS Form 8876 require?
The form collects the amount of the factoring discount, calculates the 40% excise tax, and includes payment details such as direct‑deposit information on lines 7b‑7d.
When is IRS Form 8876 due?
Form 8876 is due by the 90th day following the receipt of the structured settlement payment rights.
Where do I file IRS Form 8876?
Send the completed form to the Internal Revenue Service Center in Kansas City, MO 64999‑0019.
How do I complete IRS Form 8876?
Enter the factoring discount and compute the 40% excise tax, then report the tax on line 6. If there is an overpayment, provide direct‑deposit information on lines 7b‑7d. Sign the form as required and, if a paid preparer assisted, include the preparer’s PTIN and firm details. Mail the signed form to the Kansas City IRS Center.
What happens if IRS Form 8876 is filed incorrectly?
If the form is not filed on time, a penalty of 5% per month (up to 25%) may be imposed on the tax due, and additional penalties apply for late payment of the tax.
Do I need to file if I bought rights before 2002?
Misreading the date requirement Check the transaction date is after February 21 2002
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