That sale triggered an acceleration event, which meant the remaining 965 installments could become immediately due. The fix was not another payment schedule, it was a signed transfer agreement, filed on time, and done exactly right. That agreement is Form 965-C.
Form 965-C is not the election to pay in installments. You make the eight‑year election under Section 965(h) on your original return and report it on Form 965-A or 965-B. Form 965-C is used later, when a covered acceleration event happens, to move the remaining unpaid 965(h) installments from the transferor to a single eligible transferee so those installments do not accelerate. Think of it as a life raft for your existing 965 plan during mergers, asset sales, and certain consolidated group changes.
Quick truth, if you treat Form 965-C like an installment election or a routine attachment, you will miss critical deadlines and the liability can accelerate.
Key takeaways
- Form 965-C is a transfer agreement used after a covered acceleration event to prevent acceleration of unpaid Section 965(h) installments by shifting the liability from an eligible transferor to a single eligible transferee. It does not create the eight‑year schedule.
- You must file the signed agreement within 30 days of the acceleration event with the IRS Compliance Service Collection Operations and attach duplicate copies to both parties’ returns for the year of the event. Relief under Reg. 301.9100 is not available for late filing.
- The original eight‑year installment percentages remain the same, 8%, 8%, 8%, 8%, 8%, 15%, 20%, 25%, but Form 965-C does not reset them, it preserves them under the new responsible taxpayer.
- Include a copy of the most recent Form 965‑A or 965‑B with the transfer agreement, keep payment dates aligned with the transferee’s return due dates, and ensure both parties sign under penalties of perjury.
- Miss the 30‑day window or fail to pay installments on time, and the remaining Section 965 net tax liability can become immediately due. Interest and penalties may apply.
What Form 965-C actually does
Form 965-C memorializes a valid “Transfer Agreement Under Section 965(h)(3).” When a covered acceleration event occurs, the unpaid portion of the 965(h) net tax liability would normally accelerate. If the event qualifies and you timely file Form 965-C with the required statements, the transferee assumes the remaining installments and the schedule continues without acceleration. This is available in specific scenarios that include asset acquisitions of substantially all assets, certain consolidated group transactions, and particular situations involving the termination of an S election and consolidated group realignments.
Covered acceleration events, plain English
Covered acceleration events are a subset of acceleration events that qualify for a transfer agreement. Common ones include:
- A buyer acquires substantially all of the assets of the original 965(h) electing taxpayer.
- Certain member departures or acquisitions inside consolidated groups, handled through the group agent.
- A consolidated group reconfiguration tied to an S election termination that results in a new consolidated group including the former members.
If your fact pattern is not within these covered events, the liability can accelerate and Form 965-C will not help. Always confirm the event type against Reg. 1.965‑7(b)(3).
The eight‑year schedule, what continues after a transfer
Here is the statutory installment schedule that governs Section 965(h). It remains in place after a successful 965‑C transfer, it is not recreated by the form.
| Installment year | Percent due |
| 1 | 8% |
| 2 | 8% |
| 3 | 8% |
| 4 | 8% |
| 5 | 8% |
| 6 | 15% |
| 7 | 20% |
| 8 | 25% |
The first installment was due on the original return due date without extension for your initial 965 inclusion year, and each subsequent installment is due on the return due date for the following tax year. After a valid transfer, the transferee continues on that cadence for the assumed unpaid amount.
Who can file Form 965-C, and who cannot
- The transferor must be an eligible Section 965(h) electing taxpayer that still has unpaid installments.
- The transferee must be a single United States person that is not a domestic pass‑through entity. Consolidated group agents often act as the transferee in group transactions. Only one transferee is permitted.
Accountably note, if your firm is advising on a sale or internal reorganization with legacy 965 liabilities, build the 965‑C workstream into the deal timeline. Missing the 30‑day window creates avoidable cash calls. A simple checklist and calendar hold can save six or seven figures in surprise payments.
Compliance note, this article is for education, not tax advice. Always review the current IRS instructions and your facts before filing. The IRS “About Form 965‑C” page was last reviewed August 2, 2025, and remains the anchoring reference as of January 2, 2026.
When, where, and how to file Form 965-C
Timing is the number one risk. A transfer agreement is considered timely only if filed within 30 days of the date the acceleration event occurs. In addition, attach a duplicate copy of the transfer agreement to the transferor’s and transferee’s tax returns for the year in which the event occurs, filed by their return due dates, including extensions. There is no 301.9100 relief for late transfer agreements.
Where to send, the Form 965‑C instructions specify mailing the original to the IRS Memphis CSCO address. Follow the address in the current instructions and keep proof of timely mailing. Some legacy FAQs still reference Brookhaven CSCO, so defer to the instructions page that governs Form 965‑C today.
What to attach, include a copy of the transferor’s most recent Form 965‑A or 965‑B, as applicable. This ties the assumed amount to the IRS’s records and your installment ledger.
Step‑by‑step completion checklist
- Part I, transferor information, legal name, TIN, and address exactly as on the return.
- Part II, transferee information, same identification discipline as Part I. Confirm the transferee is a single U.S. person, not a domestic pass‑through.
- Part III, acceleration event, check the correct box for the covered acceleration event, enter the event date, and include a clear description of the transaction. Avoid vague labels.
- Part IV, unpaid 965(h) net tax liability being assumed, enter the dollar amount still unpaid and the due date of the next installment payment that the transferee must make. Reconcile to Form 965‑A or 965‑B.
- Part V, ability to pay, certify that the transferee can make the remaining payments. Answer the leverage ratio question. If the leverage ratio exceeds three to one, disclose it as instructed.
- Part VI, signatures and terms, both parties must sign under penalties of perjury, each with authority to sign the return for their entity.
Practical documentation pack
Build a thin but complete file so a reviewer can understand your numbers fast.
- The signed Form 965‑C, fully completed.
- Copy of the most recent Form 965‑A or 965‑B.
- A one‑page installment ledger that shows original net 965 liability, installments paid to date, unpaid balance, and the due date of the next installment.
- A one‑page transaction memo that ties the covered acceleration event to the selected box in Part III.
- Mailing proof, certified receipt or trackable carrier label, and screenshots confirming duplicate attachments to both tax returns.
Common mistakes and how to prevent them
- Treating Form 965‑C like a new election. The eight‑year schedule already exists, this form preserves the schedule by moving the liability to a qualifying transferee.
- Missing the 30‑day filing window. There is no late‑relief under Reg. 301.9100, so calendar the date the transaction legally closes and count 30 days.
- Picking an ineligible transferee. You need a single U.S. person that is not a domestic pass‑through. In consolidated settings, use the agent as the transferee where required by the regulations.
- Failing to include the 965‑A or 965‑B copy, which complicates IRS processing and follow up.
- Sloppy descriptions of the event. Your Part III narrative should read like a short closing memo, for example, “Corp X sold substantially all operating assets to Buyer on May 10, 2026, for cash and assumed liabilities, see APA Sections 2.1 and 2.2, which constitutes a covered acceleration event under Reg. 1.965‑7(b)(3)(iii)(A)(1)(ii).”
Example timeline you can reuse
- May 10, 2026, asset sale closes, covered acceleration event occurs.
- By June 9, 2026, mail original Form 965‑C to the IRS address in the current instructions, include the 965‑A or 965‑B copy, keep proof.
- By each party’s return due date for the year that includes May 10, 2026, attach duplicate Form 965‑C copies to the transferor and transferee returns.
- On the transferee’s next return due date, pay the next required installment under the statutory schedule.
Accountably perspective, many firms trip over handoffs between the deal team and the tax compliance team. A simple rule helps, the person who signs the APA, or the internal memo, triggers a same‑day task to prepare Form 965‑C and request the 965‑A or 965‑B copy. That keeps the 30‑day clock front and center.
FAQs on Form 965-C
Does Form 965-C create or change my eight‑year installment plan?
No. The eight‑year schedule is elected under Section 965(h) and reported on Form 965‑A or 965‑B. Form 965‑C only transfers the remaining unpaid installments to a qualifying transferee after a covered acceleration event so the schedule does not accelerate.
What if the 30‑day deadline has already passed?
The regulations say relief is not available under Reg. 301.9100 for late transfer agreements. If you miss the window, the remaining installments generally accelerate and become due on the event date. Speak with counsel immediately to evaluate options based on your facts.
Who can be the transferee in a transfer agreement?
A single U.S. person that is not a domestic pass‑through entity. In consolidated contexts, the group agent often serves as the eligible transferee. Only one transferee is permitted.
Where do I mail the original Form 965‑C?
Mail to the Compliance Service Collection Operations address listed in the current Form 965‑C instructions. As of the latest instructions, this is the Memphis CSCO address. Always verify the address on the IRS instructions page at the time you file.
What happens if a later amendment changes the 965 amount?
Per the instructions, if the 965(h) net tax liability changes on an amended return after the agreement’s due date, an amended transfer agreement is not required and should not be filed. Keep your records current and pay the correct next installment.
What if the transferee’s leverage ratio exceeds 3 to 1?
The form asks you to check whether the leverage ratio exceeds 3 to 1. You can still enter into a valid transfer agreement if you otherwise meet the requirements and certify ability to pay, but you must make the disclosure as instructed.
Recommended reading and source map
- IRS, About Form 965‑C, current overview and links to the latest form and instructions, last reviewed August 2, 2025.
- Instructions for Form 965‑C, filing address, 30‑day deadline, signatures, attachments, and line‑by‑line guidance.
- Reg. 1.965‑7, elections, installments, and covered acceleration events, including eligible transferee definitions.
- Section 965(h), statutory installment schedule and due dates.
- IRS IRM references on installment enforcement and interest, helpful for process awareness and penalty risk.
- General Section 965 Q&As for payments and transfer agreements.
Implementation checklist you can copy
- Confirm your event is a covered acceleration event under the regulations.
- Choose a single eligible transferee, confirm it is not a domestic pass‑through.
- Pull the latest Form 965‑C and instructions, then prefill Parts I through V.
- Reconcile the unpaid 965(h) balance to Form 965‑A or 965‑B and your ledger.
- Obtain both signatures under penalties of perjury.
- Mail the original within 30 days, attach duplicates to both returns, and archive proof.
- Calendar the transferee’s next installment due date and payment method.
Where Accountably helps, when it truly matters
If your firm is juggling M&A and legacy 965 liabilities, the risk is not the math, it is the handoff. Our teams help CPA firms standardize the 965‑C package, confirm eligibility against the regs, assemble 965‑A or 965‑B support, and track the 30‑day mailing, all inside your systems. That means fewer last‑minute scrambles and cleaner reviews, especially during busy season.
Final word
If you remember one thing, remember the 30‑day rule. Form 965‑C protects your existing Section 965 installment plan after qualifying transactions, but only if the document is complete, signed, and mailed on time, with the right attachments. Build the checklist into your deal playbook now, and you will avoid expensive surprises later.