IRS Form 966

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IRS Form 966

When you start a company and a business, you hope that it will live forever. But, unfortunately, sometimes you have to think about closing your corporation. During the global pandemic, the number of closing companies increased. To do everything right, you have to draw up some documents. One of them will be Form 966.

What Is Form 966

This document is drawn up by all corporations if a decision is made to dissolve the corporation or liquidate any of its stock. The form must be created within 30 days after such a decision is made. Regardless of your reasons for closing the company, you must issue this paper. This document serves as a notice to the Internal Revenue Service that you are closing the company, along with your final tax return.

Who Can File This Form

This paper must be issued by a corporation or a farmer’s cooperative if a decision is made to liquidate the company or any of its stock. But there are exceptions to the rule:

  • Exempt organizations
  • Qualified subchapter S
  • subsidiaries
  • Some foreign corporations

These types of companies will have to provide other reports to the Revenue Service.
For foreign corporations, see Form 5471 for more information. But if the company has not filed a U.S. tax return, then usually filling in 966 is not required.

When and Where to File the Form

The document must be completed within 30 days after the decision to terminate the activity is made. If, after you created the form, you changed the plan or the decision was canceled altogether, you need to create a new form reflecting the changes. Also, when submitting a new form, you will need to attach a copy of the first.

After filling out the document and signing it, the paper must be sent to the same address where you sent all the tax returns of the company.

Consequences for Incomplete the Form

You will not be charged any direct penalties if you fail to complete the form on time or at all. But indirect penalties or other damages may follow.

The size of the fines is difficult to predict; they will depend on each specific situation. Therefore, it is still better not to risk it but to fill out the form. Besides, the document takes only 1 page and does not take much time.

Below you will find our illustrated step-by-step guide to filling out the form. We recommend that you use our form-building software. This is a great tool to avoid losing any part of the document and get it done as soon as possible.

Other IRS Forms for Corporations

Dissolving or liquidation of a corporation might require filing some other legal documents with the IRS. Check what other forms your corporation might need.

How to Fill out Form 966

We present our illustrated tips for completing the document.

1. Identify the Company
First, you need to provide identifying data:

  • Name of the company
  • Full address

This information should be entered in block letters or printed.

step 1 identify the company filling out irs form 966

2. Select the Type of Return
In the upper right corner, you need to check the box next to your return type. If there is no suitable option, then mark “Other” and enter the required number.

step 2 select the type of return filling out irs form 966

3. Indicate the Details of the Company’s Incorporation
You need to enter the data regarding the registration of the company, where and when it was registered.

step 3 indicate the details of the company’s incorporation filling out irs form 966

4. Give the Details of the Solution
In point 3, check the box next to the appropriate option whether the liquidation of the company will be full or partial.

In point 4, put in the date when the decision was documented.

step 4 give the details of the solution filling out irs form 966

5. Provide Information about Immediately Preceding Tax Return
You must enter:

  • Center name and address
  • Date

If you submit the form electronically, in paragraph 5, enter “e-file.”

step 5 provide information about immediately preceding tax return filling out irs form 966

6. Date the Last Tax Year
Enter the date on which the corporation’s last tax year will come to an end.

step 6 date the last tax year filling out irs form 966

7. Check Box 7b
If the corporation’s final tax return was filed as part of a consolidated income tax return, check the appropriate box and proceed to fill in the following items.

If not, then check “No” and skip steps 7c-7e. In our guide, skip straight to point 9.

step 7 check box 7b filling out irs form 966

8. Give Data About Consolidated Return
If in the previous question you marked “Yes,” next you need to indicate:

  • Name of a common parent
  • EIN of a common parent
  • Name and address of Service center (if there was an electronic submission, then put “e-file”)

step 8 give data about consolidated return filling out irs form 966

9. Specify the Number of Shares
You need to indicate the amount that is current on the date of the plan.

step 9 specify the number of shares filling out irs form 966

10. Date All Changes
If any amendments or additions were made to the adopted plan, you must indicate the dates of all adopted changes in point 9.

step 10 date all changes filling out irs form 966

11. Identify the Code
Provide the number of the Code valid for liquidation.

step 11 identify the code filling out irs form 966

12. Enter the Date of the Previous 966 (if Any)
If an up-to-date form is generated to enter data on changes to the plan, and another form has already been drawn up, you need to indicate the date of the previous form.

step 12 enter the date of the previous 966 (if any) filling out irs form 966

You must also attach a copy of the plan, which includes all decisions and amendments. The copy must be certified.

13. Sign the Document
The Form must be signed. It is necessary to put:

  • Signature
  • Title of the signer
  • Date

The signature must be affixed by a person who has the appropriate rights.

step 13 sign the document filling out irs form 966

14. Send the Document
Once the document is properly completed and signed, send it to your IRS office.