Form 8876

(Rev. December 2013)

Department of the Treasury 

Internal Revenue Service 

Excise Tax on Structured 

Settlement Factoring Transactions

▶ Information about Form 8876 and its instructions is at www.irs.gov/form8876.

OMB No. 1545-1826

Date of receipt of structured settlement payment rights . . . . . . . . . . . . . . . . ▶

Please 

Type 

or 

Print 

Name Identifying number 

Number, street, and room or suite no. (If a P.O. box, see instructions.) 

City or town, state or province, country, and ZIP or foreign postal code

1 Total undiscounted amount of structured settlement payments being acquired . . . . . . 1 

2 Total amount paid for the above structured settlement payment rights . . . . . . . . . 2 

3 Factoring discount. Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . 3 

4 Tax. Multiply line 3 by 40% (.40) . . . . . . . . . . . . . . . . . . . . . 4 

5 Less: Tax paid with Form 7004 . . . . . . . . . . . . . . . . . . . . . . 5 

6 Tax due. Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . 6 

7 Overpayment. If line 5 is greater than line 4, subtract line 4 from line 5 . . . . . . . . 7 

Sign 

Here 

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my 

knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any 

knowledge.

▲

Signature Date ▲

Title (if any)

Paid 

Preparer 

Use Only

Print/Type preparer’s name Preparer's signature Date Check if 

self-employed

PTIN

Firm’s name ▶ Firm's EIN ▶

Firm's address ▶ Phone no.

Section references are to the Internal 

Revenue Code unless otherwise noted. 

Future Developments

For the latest information about developments 

related to Form 8876 and its instructions, 

such as legislation enacted after they were 

published, go to www.irs.gov/form8876.

General Instructions 

Purpose of Form 

Use Form 8876 to report and pay the 40% 

excise tax imposed under section 5891 on the 

factoring discount of a structured settlement 

factoring transaction. File a separate Form 

8876 for each date on which you received 

structured settlement payment rights in one 

or more structured settlement factoring 

transactions. 

Definitions 

Structured settlement. A structured

settlement is an arrangement: 

• Established (a) by suit or agreement for the 

periodic payment of damages excludable 

from the gross income of the recipient under 

section 104(a)(2) or (b) by agreement for the 

periodic payment of compensation under any 

workers’ compensation law excludable from 

the gross income of the recipient under

section 104(a)(1); and 

• Under which the periodic payments are (a) 

of the character described in section 130(c)(2)

(A) and (B) and (b) payable by a person who is 

a party to the suit or agreement or to the 

workers’ compensation claim or by a person 

who has assumed the liability for such 

periodic payments under a qualified 

assignment in accordance with section 130. 

Structured settlement factoring 

transaction. A structured settlement 

factoring transaction is a transfer of 

structured settlement payment rights 

(including portions of structured settlement

payments) made for consideration by means 

of sale, assignment, pledge, or other form of 

encumbrance or alienation for consideration. 

The following are not structured settlement 

factoring transactions. 

• The creation or perfection of a security 

interest in structured settlement payment 

rights under a blanket security agreement 

entered into with an insured depository 

institution in the absence of any action to 

redirect the structured settlement payments 

to that institution (or agent or successor 

thereof) or otherwise to enforce such blanket 

security interest as against the structured 

settlement payment rights. 

• A subsequent transfer of structured

settlement payment rights acquired in a

structured settlement factoring transaction. 

Structured settlement payment rights. 

Structured settlement payment rights are

rights to receive payments under a structured 

settlement.

Factoring discount. The factoring discount is 

the difference between the total undiscounted 

amount of structured settlement payments 

being acquired (line 1) and the total amount 

paid by the acquirer to the person(s) from 

whom the structured settlement payment 

rights are acquired (line 2).

Qualified order. A qualified order is a final

order, judgment, or decree that:

For Privacy Act and Paperwork Reduction Act Notice, see instructions. Cat. No. 33529K Form 8876 (Rev. 12-2013) 
Form 8876 (Rev. 12-2013) Page 2 

• Finds that the transfer of structured 

settlement payment rights does not 

contravene any federal or state statute or the 

order of any court or responsible 

administrative authority, and is in the best 

interest of the payee, taking into account the 

welfare and support of the payee’s 

dependents; and

• Is issued under the authority of an 

applicable state statute by an applicable state 

court, or by the responsible administrative 

authority (if any) that has exclusive jurisdiction 

over the underlying action or proceeding that 

was resolved by means of the structured 

settlement. 

Who Must File 

Generally, you must file Form 8876 if you 

acquire directly or indirectly structured 

settlement payment rights in a structured 

settlement factoring transaction entered into 

after February 21, 2002. However, do 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. 

When To File 

File Form 8876 by the 90th day following the 

receipt of structured settlement payment 

rights in a structured settlement factoring 

transaction. 

If you need more time, file Form 7004, 

Application for Automatic Extension of Time 

To File Certain Business Income Tax, 

Information, and Other Returns, by the due 

date of Form 8876. Form 7004 does not 

extend the time for payment of tax. 

Where To File 

Send Form 8876 to the following address:

Internal Revenue Service Center 

Cincinnati, OH 45999

Rounding Off to Whole Dollars 

You can round off cents to whole dollars on 

your return and schedules. If you do round to 

whole dollars, you must round all amounts. To 

round, drop amounts under 50 cents and 

increase amounts from 50 to 99 cents to the 

next dollar. For example, $1.39 becomes $1 

and $2.50 becomes $3. 

If you have to add two or more amounts to 

figure the amount to enter on a line, include 

cents when adding the amounts and round off 

only the total. 

Amended Return 

To amend a previously filed Form 8876, file a 

corrected Form 8876 and write “Amended” at 

the top of the form. 

Interest and Penalties 

Interest. Interest is charged on taxes not paid 

by the due date at a rate determined under 

section 6621. 

Late filing of return. Generally, a penalty of 

5% a month or part of a month, up to a

maximum of 25%, is imposed on the net

amount due if Form 8876 is not filed when 

due. This penalty will not be imposed if you 

have reasonable cause for not filing on time. 

If you do, attach an explanation. 

Late payment of tax. Generally, the penalty 

for not paying tax when due is 1/2 of 1% of

the unpaid amount, up to a maximum of 25%, 

for each month or part of a month the tax 

remains unpaid. The penalty is imposed on 

the net amount due. This penalty will not be 

imposed if you have reasonable cause for not 

paying on time. 

Additional Information 

For more details, see section 5891 and 

Regulations section 157.5891-1. 

Specific Instructions 

Name and address. Enter the name shown 

on your most recently filed federal income tax 

return. If the Post Office does not deliver mail 

to the street address and you have a P.O. 

box, show the box number instead of the 

street address. 

Foreign Address. Follow the country's 

practice for entering the postal code. In some 

countries the postal code may come before 

the city or town name. Enter the full name of 

the country using uppercase letters in English. 

Identifying number. If you are an individual, 

enter your social security number. Other filers 

should enter their employer identification 

number. 

Line 5. Tax paid with Form 7004. If you filed 

Form 7004 for the payment rights received on 

the date shown on the top of this Form 8876, 

enter the amount of tax paid, if any, when you 

filed that extension application. 

Line 6. Tax due. Make your check or money 

order payable to “United States Treasury.”

Write your name, address, identifying number, 

and “Form 8876” on the check or money 

order. 

Line 7. Overpayment. The IRS will refund the 

amount on line 7 (to the extent you owe no 

other taxes). 

Signature. For information on who must sign 

Form 8876, see the instructions for the 

signature section of your federal income tax 

return. 

Paid Preparer Use Only

A paid preparer must sign Form 8876 and 

provide the information in the Paid Preparer 

Use Only section at the end of the form if the 

preparer was paid to prepare the form and is 

not an employee of the filing entity. The 

preparer must give you a copy of the form in 

addition to the copy to be filed with the IRS.

If you are a paid preparer, enter your 

Preparer Tax Identification Number (PTIN) in 

the space provided. If you work for a tax 

preparation firm, you must also enter the 

firm's name, address, and EIN. However, you 

cannot use the PTIN of the tax preparation 

firm in place of your PTIN.

You can apply for a PTIN online or by filing 

Form W-12, IRS Paid Preparer Tax 

Identification Number (PTIN) Application and 

Renewal. For more information about applying 

for a PTIN online, visit the IRS website at 

www.irs.gov/ptin.

Privacy Act and Paperwork Reduction Act 

Notice. We ask for the information on this 

form to carry out the Internal Revenue laws of 

the United States. We need it to figure and 

collect the right amount of tax. If you do not 

file a return, do not provide the information we 

ask for, or provide fraudulent information, you 

may be subject to penalties.

Our legal right to ask for information is 

sections 6001, 6011, and 6012(a) and their 

regulations, which require you to file a return 

or statement with us for any tax for which you 

are liable. Your response is mandatory under 

these sections. Section 6109 requires you to 

provide your identifying number. You must fill 

in all parts of the form that apply to you. 

You are not required to provide the 

information requested on a form that is 

subject to the Paperwork Reduction Act 

unless the form displays a valid OMB control 

number. Books or records relating to a form 

or its instructions must be retained as long as 

their contents may become material in the 

administration of any Internal Revenue law. 

We ask for the information on this form to 

carry out the tax laws of the United States. 

Generally, tax returns and return 

information are confidential, as required by 

section 6103. However, section 6103 allows 

or requires the IRS to disclose or give the 

information shown on your tax return to 

others as described there. For example, we 

may disclose your tax information to the 

Department of Justice to enforce the tax laws, 

both civil and criminal, and to cities, states, 

the District of Columbia, and U.S. 

commonwealths or possessions to administer 

their tax laws. We may also disclose this 

information to other countries under a tax 

treaty, to federal and state agencies to 

enforce federal nontax criminal laws, or to 

federal law enforcement and intelligence 

agencies to combat terrorism. 

The time needed to complete and file this 

form will vary depending on individual 

circumstances. The estimated average time is:

Recordkeeping . . . . 3 hr., 6 min. 

Learning about the law 

or the form . . . . . 1 hr., 12 min. 

Preparing, copying, 

assembling, and sending 

the form to the IRS . . . 1 hr., 17 min. 

If you have comments concerning the 

accuracy of these time estimates or 

suggestions for making this form simpler, we 

would be happy to hear from you. You can 

send your comments from www.irs.gov/

formspubs/. Click on “More Information” and 

then on “Comment on Tax Forms and 

Publications.” You can also write to: 

Internal Revenue Service 

Tax Forms and Publications 

1111 Constitution Ave. NW 

IR-6526 

Washington, DC 20224

Do not send the tax form to this address. 

Instead, see Where To File, earlier.