Form FORM-8831 Excise Taxes on Excess Inclusions of REMIC Residual Inte

8831

Excise Taxes on Excess Inclusions of
REMIC Residual Interests

Form
(Rev. January 2012)
Department of the Treasury
Internal Revenue Service
Name

Please
Type or
Print

OMB No. 1545-1379

Identifying number

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

Part I Transfers to Disqualified Organizations. File a separate Form 8831 for each transfer of a residual interest.
Section A—Information on the Transfer
1
2
3

Enter the date the residual interest was transferred to a disqualified organization . . . . . ▶
Within a reasonable time after discovering this transfer was subject to tax under section 860E(e)(1), were
steps taken so that the residual interest you transferred is no longer held by a disqualified organization? ▶
Yes
No
If you answered “Yes” to question 2, enter the date the disqualified organization disposed of the
residual interest . . . . . . . . . . . . . . . . . . . . . . . . . . . ▶
If you answered “Yes” to question 2, the tax due under section 860E(e)(1) will be waived if you pay the amount due under
Regulations section 1.860E-2(a)(7)(ii). Skip Section B and go to Section C to figure the amount due.
If you answered “No” to question 2, use Section B to figure the tax due under section 860E(e)(1). Do not complete Section C.

Section B—Tax Due Under Section 860E(e)(1). Complete this section only if you answered “No” to question 2.
4

Enter the present value of the excess inclusions allocable to the residual interest you transferred
that are expected to accrue in each calendar quarter (or part thereof) following the transfer of that
interest to the disqualified organization (see instructions) . . . . . . . . . . . . . .

5

Tax due. Multiply line 4 by 35%

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

4
5

Section C—Amount Due Under Regulations Section 1.860E-2(a)(7)(ii). Complete this section only if you answered
“Yes” to question 2.
6

Enter the amount of excess inclusions allocable to the residual interest you transferred that
accrued during the period the disqualified organization held that interest . . . . . . . . .

7

Amount due. Multiply line 6 by 35% .

Part II
8
9
10

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

6
7

Tax on Pass-Through Entities With Interests Held by Disqualified Organizations. File a separate Form
8831 for Part II if you owe tax in Part I.

Enter the ending date of the pass-through entity’s tax year for which
this return is being filed . . . . . . . . . . . . . . ▶
Enter the amount of excess inclusions allocable to interests in the pass-through entity for which
the record holder is a disqualified organization
. . . . . . . . . . . . . . . . .
.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

9
10

Enter the amount from line 5, 7, or 10, whichever applies
Amount paid with Form 7004 . . . . . . . . .
Amount due. Enter the excess of line 11 over line 12 .
Overpayment. Enter the excess of line 12 over line 11 .

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

.
.
.
.

11
12
13
14

Tax due. Multiply line 9 by 35%

Part III
11
12
13
14

.

.

.

.

.

.

.

.

Tax and Payments

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

Firm’s name

▶

Firm's EIN

Firm's address

▶

Phone no.

For Privacy Act and Paperwork Reduction Act Notice, see page 3.

Cat. No. 13377A

PTIN

▶

Form 8831 (Rev. 1-2012)

Form 8831 (Rev. 1-2012)

General Instructions
Section references are to the Internal
Revenue Code unless otherwise noted.

What's New
The IRS has created a page on IRS.gov
for information about Form 8831 at
www.irs.gov/form8831. Information
about any future developments affecting
Form 8831 (such as legislation enacted
after we release it) will be posted on that
page.

Purpose of Form
Use Form 8831 to report and pay:
• The excise tax due under section
860E(e)(1) on any transfer of a residual
interest in a REMIC to a disqualified
organization,
• The amount due under Regulations
section 1.860E-2(a)(7)(ii) if the tax under
section 860E(e)(1) is to be waived, or
• The excise tax due under section
860E(e)(6) on pass-through entities with
interests held by disqualified
organizations. All interests in an electing
large partnership are treated as held by
disqualified organizations (see section
774(e) for details).

Definitions
A disqualified organization is:
• The United States, any state or
political subdivision thereof, any foreign
government, any international
organization, or any of their agencies or
instrumentalities (except for certain
taxable instrumentalities described in
section 168(h)(2)(D) and the Federal
Home Loan Mortgage Corporation);
• Any tax-exempt organization (other than a
farmers’ cooperative described in section
521), unless that organization is subject to
the unrelated business income tax; and
• Any cooperative described in section
1381(a)(2)(C).
A pass-through entity is a regulated
investment company, real estate
investment trust, common trust fund,
partnership, trust, estate, or a cooperative
described in section 1381. A person
holding an interest in a pass-through entity
as a nominee for another person is also
treated as a pass-through entity.

Who Must File
You must file Form 8831 if you are liable
for the excise tax in Part I under section
860E(e)(1) (or the amount due under
Regulations section 1.860E-2(a)(7)(ii))
because you transferred a residual
interest in a REMIC to a disqualified
organization after March 31, 1988
(unless the transfer was made under a
binding contract in effect on that date).
File a separate Form 8831 for each
transfer of a residual interest.

Page

You will be relieved of the liability for
the tax if you obtain an affidavit from the
transferee signed under penalties of
perjury that either furnishes the
transferee’s social security number or
states that the transferee is not a
disqualified organization, provided you
do not have actual knowledge at the
time of the transfer that the affidavit is
false.
A pass-through entity must file Form
8831 if it is liable for the tax in Part II
under section 860E(e)(6). The entity must
pay this tax if, at any time during the
entity’s tax year, excess inclusions from
a residual interest in a REMIC are
allocable to an interest in the entity for
which the record holder is a disqualified
organization. The tax applies to excess
inclusions for periods after March 31,
1988, but only to the extent the
inclusions are allocable either to an
interest in the pass-through entity
acquired after March 31, 1988, or to a
residual interest acquired by the passthrough entity after March 31, 1988. Any
interest acquired under a binding
contract in effect on March 31, 1988, is
treated as acquired before that date. A
real estate investment trust, regulated
investment company, common trust
fund, or publicly traded partnership is
subject to the tax due under section
860E(e)(6) only for tax years beginning
after 1988.
Generally, a pass-through entity is not
subject to the excise tax under section
860E(e)(6) if it obtains an affidavit from
the record holder signed under penalties
of perjury that either furnishes the record
holder’s social security number or states
that the record holder is not a
disqualified organization. The affidavit
provides relief for any period during
which the pass-through entity does not
have actual knowledge that the affidavit
is false. However, this relief does not
apply to electing large partnerships.
A pass-through entity that owes both
the excise tax in Part I under section
860E(e)(1) (or the amount due under
Regulations section 1.860E-2(a)(7)(ii))
and the excise tax in Part II under
section 860E(e)(6) must file a separate
form for each tax.

When To File
For the excise tax due under section
860E(e)(1), file Form 8831 and pay the
tax by April 15 of the year following the
calendar year in which the residual
interest is transferred to a disqualified
organization. A pass-through entity must
file Form 8831 and pay the tax due
under section 860E(e)(6) by the 15th day
of the 4th month following the close of

2

its tax year in which the disqualified
person is a record holder. If the due
date falls on a Saturday, Sunday, or
legal holiday, file on the next day that is
not a Saturday, Sunday, or legal holiday.
If more time is needed, use Form
7004, Application for Automatic
Extension of Time To File Certain
Business Income Tax, Information, and
Other Returns, to request an extension
of time to file Form 8831. However, Form
7004 does not extend the time for
payment of tax.

Where To File
File Form 8831 at the following address:
Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45999

Rounding Off to Whole
Dollars
You may round off cents to whole
dollars on your returns 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 8831,
file a corrected Form 8831 marked
“Amended” at the top of the form.

Signature
See the instructions for the “Signature”
section of your federal income tax
return.

Interest and Penalties
Interest. Interest is charged on taxes
not paid by the due date. Interest is also
charged on certain penalties. The
interest charged is figured at a rate
determined under section 6621.
Late filing penalty. Generally, a penalty
of 5% a month or part of a month, up to
a maximum of 25%, is imposed on the
net amount of tax due if the excise tax
return is not filed when due.
Late payment penalty. Generally, the
penalty for not paying tax when due is
1/2 of 1% of the unpaid tax, up to a
maximum of 25%, for each month or
part of a month the tax remains unpaid.

Form 8831 (Rev. 1-2012)

Specific Instructions
Name and Address
Enter the name shown on your most
recently filed federal income tax return.
Include the suite, room, apartment, or
other unit number after the street
address. 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.

Identifying Number
If you are an individual, enter your social
security number. Other filers, enter your
employer identification number.

Part I
Line 4. The excess inclusions expected
to accrue must be determined as of the
date the residual interest is transferred
and must be based on events that have
occurred up to the time of the transfer,
the prepayment and reinvestment
assumptions adopted under section
1272(a)(6) (or that would have been
adopted if the REMIC’s regular interests
had been issued with original issue
discount), and any required or permitted
clean-up calls, or required qualified
liquidation provided under the REMIC’s
organizational documents.
The present value of the excess
inclusions expected to accrue is
determined by discounting all remaining
excess inclusions expected to accrue on
the residual interest from the end of
each calendar quarter in which those
inclusions are expected to accrue to the
date the disqualified organization
acquired the residual interest. The
discount rate to be used in this
computation is the applicable federal
rate under section 1274(d)(1) that would
apply to a debt instrument issued on the
date the disqualified organization
acquired the residual interest and with a
term that ends on the last day of the last
quarter in which excess inclusions are
expected to accrue for the interest.

Page

The REMIC must furnish the
information needed to figure the amount
on line 4 upon your request. The
information must be furnished within 60
days of the request. The REMIC may
charge a fee for this information.
Line 6. Enter the amounts reported on
Schedule Q (Form 1066), Quarterly
Notice to Residual Interest Holder of
REMIC Taxable Income or Net Loss
Allocation, line 2c, to the disqualified
organization for the period it held the
residual interest.

Part II
Line 9. Enter the amounts reported on
Schedule Q (Form 1066), line 2c, for the
tax year of the pass-through entity that
are allocable to all disqualified
organizations that held an interest in the
entity.
Line 10. In general, deduct the amount
on line 10 to figure the ordinary income
of the pass-through entity. For example,
a real estate investment trust deducts
the tax to figure its real estate
investment trust taxable income under
section 857(b)(2). However, an electing
large partnership excludes the amount
subject to tax (line 9) instead of
deducting the tax (line 10) from its
income.

Part III
Line 12. If you filed Form 7004, enter
the amount paid, if any, when you filed
that form.
Line 13. You must pay the full amount
reported on line 13. If payment will
accompany the form, make your check
or money order payable to the “United
States Treasury.” Write your name,
address, identifying number, and “Form
8831” on the check or money order.
You may also make your payment
using the Electronic Federal Tax
Payment System (EFTPS). To do so you
must be enrolled in EFTPS. To enroll in
or get more information about EFTPS,
visit www.eftps.gov.
Line 14. The IRS will refund the amount
on line 14 if you owe no other taxes.

3

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. This form is used to
determine the amount of taxes you owe
as imposed by section 860E. Section
6011 requires you to provide the
requested information if the tax is
applicable to you. Section 6109 requires
you to provide your taxpayer
identification number (SSN or EIN).
Routine uses of this information include
giving it to the Department of Justice for
civil and criminal litigation and to cities,
states, and the District of Columbia for
use in administering 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. If you fail
to provide this information in a timely
manner, you may be subject to penalties
and interest.
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. Generally, tax returns and return
information are confidential, as required
by section 6103.
The time needed to complete and file
this form will vary depending on
individual circumstances. The estimated
average time is: Recordkeeping, 4 hr.,
32 min.; Learning about the law or the
form, 1 hr., 29 min.; Preparing,
copying, assembling, and sending the
form to the IRS, 1 hr., 37 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 write to the Internal
Revenue Service, Tax Products
Coordinating Committee,
SE:W:CAR:MP:T:M:S, 1111 Constitution
Ave. NW, IR-6526, Washington, DC
20224. Do not send the tax form to this
address. Instead, see Where To File,
earlier.