8876_ Excise Tax on Structured Settlement Factoring Transactions by ktixcqlmc


									Form    8876                                            Excise Tax on Structured
(Rev. December 2008)                               Settlement Factoring Transactions                                                                    OMB No. 1545-1826
Department of the Treasury                                          �   See instructions below.
Internal Revenue Service

Date of receipt of structured settlement payment rights                                                                              �
               Name                                                                                                                      Identifying number

               Number, street, and room or suite no. (If a P.O. box, see instructions.)
Print          City or town, state, and ZIP 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
                 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
     Sign        any knowledge.

                 �    Signature                                                             Date                   �    Title (if any)

           signature          �                                                             Date
                                                                                                                   Check if
                                                                                                                                                  Preparer’s SSN or PTIN

           Firm’s name (or                                                                                                EIN
Use Only   yours if self-employed),
                 address, and ZIP code                                                                                    Phone no.          (          )

General Instructions                                        2. Under which the periodic payments                      2. A subsequent transfer of structured
                                                          are (a) of the character described in                    settlement payment rights acquired in a
Section references are to the Internal                    section 130(c)(2)(A) and (B) and (b) payable             structured settlement factoring transaction.
Revenue Code unless otherwise noted.                      by a person who is a party to the suit or                Structured settlement payment rights.
                                                          agreement or to the workers’                             Structured settlement payment rights are
Purpose of Form                                           compensation claim or by a person who                    rights to receive payments under a
                                                          has assumed the liability for such periodic              structured settlement.
Use Form 8876 to report and pay the 40%                   payments under a qualified assignment in
excise tax imposed under section 5891 on                  accordance with section 130.                             Factoring discount. The factoring
the factoring discount of a structured                                                                             discount is the difference between the total
settlement factoring transaction. File a                  Structured settlement factoring                          undiscounted amount of structured
separate Form 8876 for each date on                       transaction. A structured settlement                     settlement payments being acquired
which you received structured settlement                  factoring transaction is a transfer of                   (line 1) and the total amount paid by the
payment rights in one or more structured                  structured settlement payment rights                     acquirer to the person(s) from whom the
settlement factoring transactions.                        (including portions of structured settlement             structured settlement payment rights are
                                                          payments) made for consideration by                      acquired (line 2).
Definitions                                               means of sale, assignment, pledge, or
                                                          other form of encumbrance or alienation                  Qualified order. A qualified order is a final
Structured settlement. A structured                       for consideration.                                       order, judgment, or decree that:
settlement is an arrangement:
                                                            The following are not structured                       ● Finds that the transfer of structured
  1. Established (a) by suit or agreement                 settlement factoring transactions.                       settlement payment rights does not
for the periodic payment of damages                                                                                contravene any federal or state statute or
excludable from the gross income of the                     1. The creation or perfection of a
                                                          security interest in structured settlement               the order of any court or responsible
recipient under section 104(a)(2) or (b) by                                                                        administrative authority, and is in the best
agreement for the periodic payment of                     payment rights under a blanket security
                                                          agreement entered into with an insured                   interest of the payee, taking into account
compensation under any workers’                                                                                    the welfare and support of the payee’s
compensation law excludable from the                      depository institution in the absence of any
                                                          action to redirect the structured settlement             dependents and
gross income of the recipient under
section 104(a)(1) and                                     payments to that institution (or agent or
                                                          successor thereof) or otherwise to enforce
                                                          such blanket security interest as against
                                                          the structured settlement payment rights.

For Privacy Act and Paperwork Reduction Act Notice, see page 2.                                            Cat. No. 33529K                       Form       8876   (Rev. 12-2008)
Form 8876 (Rev. 12-2008)                                                                                                           Page   2
● Is issued under the authority of an         Late payment of tax. Generally, the               You are not required to provide the
applicable state statute by an applicable     penalty for not paying tax when due is 1⁄ 2    information requested on a form that is
state court, or by the responsible            of 1% of the unpaid amount, up to a            subject to the Paperwork Reduction Act
administrative authority (if any) that has    maximum of 25%, for each month or part         unless the form displays a valid OMB
exclusive jurisdiction over the underlying    of a month the tax remains unpaid. The         control number. Books or records relating
action or proceeding that was resolved by     penalty is imposed on the net amount due.      to a form or its instructions must be
means of the structured settlement.           This penalty will not be imposed if you        retained as long as their contents may
                                              have reasonable cause for not paying on        become material in the administration of
Who Must File                                 time.                                          any Internal Revenue law. We ask for the
Generally, you must file Form 8876 if you                                                    information on this form to carry out the
acquire directly or indirectly structured     Additional Information                         tax laws of the United States. We need it
settlement payment rights in a structured                                                    to figure and collect the right amount of
                                              For more details, see section 5891 and         tax. If you do not file a return, do not
settlement factoring transaction entered      Regulations section 157.5891-1.
into after February 21, 2002. However, do                                                    provide the information we ask for, or
not file Form 8876 if the transfer of         Specific Instructions                          provide fraudulent information, you may
structured settlement payment rights was                                                     be charged penalties and be subject to
approved in advance in a qualified order,     Name and address. Enter the name               criminal prosecution.
as no excise tax is due.                      shown on your most recently filed federal         Generally, tax returns and return
                                              income tax return. Include the suite, room,    information are confidential, as required by
When To File                                  apartment, or other unit number after the      section 6103. However, section 6103
                                              street address. If the Post Office does not    allows or requires the Internal Revenue
File Form 8876 by the 90th day following      deliver mail to the street address and the
the receipt of structured settlement                                                         Service to disclose or give the information
                                              taxpayer has a P.O. box, show the box          shown on your tax return to others as
payment rights in a structured settlement     number instead of the street address.
factoring transaction.                                                                       described in the Code. For example, we
                                              Identifying number. If you are an              may disclose your tax information to the
   If you need more time, file Form 7004,     individual, enter your social security         Department of Justice to enforce the tax
Application for Automatic Extension of        number. Other filers should enter their        laws, both civil and criminal, and to cities,
Time To File Certain Business Income Tax,     employer identification number.                states, the District of Columbia, U.S.
Information, and Other Returns, by the due                                                   commonwealths or possessions, and
date of Form 8876. Form 7004 does not         Line 5. Tax paid with Form 7004. If you        certain foreign governments to carry out
extend the time for payment of tax.           filed Form 7004 for the payment rights         their laws. We may also disclose this
                                              received on the date shown on the top of       information to other countries under a tax
Where To File                                 this Form 8876, enter the amount of tax        treaty, to federal and state agencies to
                                              paid, if any, when you filed that extension    enforce federal nontax criminal laws, or to
File Form 8876 with the Internal Revenue      application.
Service Center, Cincinnati, OH 45999.                                                        federal law enforcement and intelligence
                                              Line 6. Tax due. Make your check or            agencies to combat terrorism.
Rounding Off to Whole                         money order payable to “United States             Please keep this notice with your
                                              Treasury.” Write your name, address,           records. It may help you if we ask you for
Dollars                                       identifying number, and “Form 8876” on         other information. If you have any
You can round off cents to whole dollars      the check or money order.                      questions about the rules for filing and
on your return and schedules. If you do       Line 7. Overpayment. The IRS will refund       giving information, please call or visit any
round to whole dollars, you must round all    the amount on line 7 (to the extent you        Internal Revenue Service office.
amounts. To round, drop amounts under         owe no other taxes).                              The time needed to complete and file
50 cents and increase amounts from 50 to                                                     this form will vary depending on individual
99 cents to the next dollar. For example,     Signature. For information on who must         circumstances. The estimated average
$1.39 becomes $1 and $2.50 becomes $3.        sign Form 8876, see the instructions for       time is:
                                              the signature section of your federal
  If you have to add two or more amounts      income tax return.                             Recordkeeping                   3 hr., 6 min.
to figure the amount to enter on a line,                                                     Learning about the law
include cents when adding the amounts         Privacy Act and Paperwork Reduction            or the form                    1 hr., 12 min.
and round off only the total.                 Act Notice. These Acts require that when       Preparing and sending
                                              we ask you for information we must first       the form to the IRS            1 hr., 17 min.
Amended Return                                tell you our legal right to ask for the
                                              information, why we are asking for it, and        If you have comments concerning the
To amend a previously filed Form 8876,                                                       accuracy of these time estimates or
                                              how it will be used. We must also tell you
file a corrected Form 8876 and write                                                         suggestions for making this form simpler,
                                              what could happen if we do not receive it
“Amended” at the top of the form.                                                            we would be happy to hear from you. You
                                              and whether your response is voluntary,
                                              required to obtain a benefit, or mandatory     can write to the Internal Revenue Service,
Interest and Penalties                        under the law.                                 Tax Products Coordinating Committee,
Interest. Interest is charged on taxes not                                                   SE:W:CAR:MP:T:T:SP, 1111 Constitution
                                                Our legal right to ask for information is    Ave. NW, IR-6526, Washington, DC 20224.
paid by the due date at a rate determined     sections 6001, 6011, and 6012(a) and their
under section 6621.                                                                          Do not send the tax form to this address.
                                              regulations, which require you to file a       Instead, see Where To File on this page.
Late filing of return. Generally, a penalty   return or statement with us for any tax for
of 5% a month or part of a month, up to a     which you are liable. Your response is
maximum of 25%, is imposed on the net         mandatory under these sections. Section
amount due if Form 8876 is not filed when     6109 requires you to provide your
due. This penalty will not be imposed if      identifying number. This is so we know
you have reasonable cause for not filing on   who you are, and can process your return
time. If you do, attach an explanation.       and other papers. You must fill in all parts
                                              of the tax form that apply to you.

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