U.S. Individual Income Tax Return Forms

Instructions for Form 965-C

Department of the Treasury
Internal Revenue Service

(December 2019)

Transfer Agreement Under Section 965(h)(3)
Section references are to the Internal Revenue
Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Form 965-C and
its instructions, such as legislation
enacted after they were published, go to
IRS.gov/Form965C.

Background

On December 22, 2017, section 965 of the
Code (section 965) was amended. As a
result of the amendment, certain
taxpayers are required to include in
income an amount (a section 965(a)
inclusion amount) based on the
accumulated post-1986 deferred foreign
income of certain foreign corporations
(specified foreign corporations) they own
either directly or indirectly through other
entities.
Taxpayers may make an election under
section 965(h) to pay the section 965(h)
net tax liability (as defined later in these
instructions) in installments over a term of
8 years. However, if an acceleration event
(as defined in section 965(h)(3) and
Regulations section 1.965-7(b)(3)) occurs,
the unpaid portion of all remaining
installments is generally due on the date of
the acceleration event. If a covered
acceleration event (as defined below)
occurs, such event will not be considered
to accelerate payment of the section
965(h) net tax liability if the transferee
enters into an agreement to be liable for
the remaining installments due on the
liability in the same manner as if such
transferee were the original electing
taxpayer.

General Instructions
Purpose of Form

Form 965-C should be used by an eligible
section 965(h) transferor and an eligible
section 965(h) transferee to enter into a
transfer agreement under section 965(h)
(3). This form sets forth the information
and representations that must be provided
to meet the requirements of Regulations
section 1.965-7(b)(3)(iii)(B)(4) in order to
enter into a transfer agreement under
section 965(h)(3). If an eligible section
965(h) transferor and an eligible section
965(h) transferee properly complete and
file this Form 965-C with respect to a
covered acceleration event in accordance

Jan 27, 2020

with these instructions, they will be
considered to have properly entered into a
transfer agreement under section 965(h)
(3). However, the Commissioner may
review the transfer agreement and may
ask additional questions or require
additional information, including, for
example, information about the eligible
section 965(h) transferee's ability to pay
the outstanding section 965(h) net tax
liability. If the Commissioner determines
that the transfer agreement contains a
material misrepresentation or material
omission, or if the additional information
requested is not provided within a
reasonable time frame (as communicated
by the Commissioner), then the transfer
agreement may be rejected as of the date
of the original acceleration event.
Alternatively, the Commissioner may
determine that an acceleration event has
occurred as of the date the transfer
agreement was found to have a material
misrepresentation or material omission.

Definitions
Eligible section 965(h) transferee. An
eligible section 965(h) transferee is a
single U.S. person that is not a domestic
pass-through entity and that meets any
one of the six requirements listed in
Regulations section 1.965-7(b)(3)(iii)(B)(1)
(i) through (vi).
Eligible section 965(h) transferor. An
eligible section 965(h) transferor is a U.S.
person with respect to which a covered
acceleration event occurs. See the
instructions for Part III, line 1, for when a
covered acceleration event occurs.
Section 965(h) net tax liability. In
general, the section 965(h) net tax liability
with respect to any U.S. shareholder is the
excess (if any) of the U.S. shareholder's
net income tax liability computed with all
section 965 amounts included over the
U.S. shareholder's net income tax liability
without regard to section 965. For details,
see section 965(h)(6). Also see
Regulations section 1.965-7(g)(10) for
rules for computing the net 965 tax
liability.

Who Must File

The eligible section 965(h) transferor and
the eligible section 965(h) transferee with
respect to a covered acceleration event
must file Form 965-C to meet the
requirements of the eligible section 965(h)
transferee exception under Regulations
section 1.965-7(b)(3)(iii). Form 965-C may
Cat. No. 72023R

only be filed by an eligible section 965(h)
transferor and eligible section 965(h)
transferee.

When and Where To File

Within 30 days of the covered acceleration
event, the original Form 965-C must be
mailed to the IRS’s Memphis Compliance
Service Collection Operations at the
following address:
Memphis CSCO
5333 Getwell Road MS 81
Memphis, TN 38118
In addition, both the eligible section
965(h) transferor and the eligible section
965(h) transferee must attach a duplicate
copy of Form 965-C to their tax returns for
the taxable years during which the
covered acceleration event occurs, filed
by the due date for the returns (with regard
to any extension of time to file).
No extension of time to file Form
965-C will be granted, and relief is
CAUTION not available under Regulations
section 301.9100-2 or 301.9100-3 to enter
into a transfer agreement late.

!

A copy of the eligible section 965(h)
transferor's most recent Form 965-A or
Form 965-B, as applicable, is required to
be included with Form 965-C.
Note. If the section 965(h) net tax liability
is adjusted or changed on an amended
return after the due date for filing the
transfer agreement, an amended transfer
agreement is not required and should not
be filed.

Specific Instructions
Part I – Transferor
Information

Use Part I to provide the identifying
information of the eligible section 965(h)
transferor. Enter the transferor’s complete
legal name, taxpayer identification
number, and street address or post office
box.

Part II – Transferee
Information

Use Part II to provide the identifying
information of the eligible section 965(h)
transferee. Enter the transferee’s
complete legal name, taxpayer

identification number, and street address
or post office box.

Part III – Acceleration
Event
Line 1. Indicate the type of acceleration
event leading to this transfer agreement
by checking box a, b, or c.
Check box a if the acceleration event
leading to this transfer agreement is
described in Regulations section
1.965-7(b)(3)(iii)(A)(1)(i) or (ii). If you
check box a, answer the three questions
below box a.
Check box b if the acceleration event
leading to this transfer agreement is
described in Regulations section
1.965-7(b)(3)(iii)(A)(1)(iii).
Check box c and box c(1) if the
acceleration event leading to this transfer
agreement is described in Regulations
section 1.965-7(b)(3)(iii)(A)(1)(iv). Also
answer the question below box c(1).
Check box c and box c(2) if the
acceleration event leading to this transfer
agreement is described in Regulations
section 1.965-7(b)(3)(iii)(A)(1)(v). Also
answer the question below box c(2).
Check box c and box c(3) if the
acceleration event leading to this transfer
agreement is described in Regulations
section 1.965-7(b)(3)(iii)(A)(1)(vi). Also
answer the question below box c(3).
Covered acceleration event. A person
satisfies the requirement to have a
covered acceleration event if that person
is able to check box a, b, or c based on
the above instructions.
Line 2. Enter the date of the covered
acceleration event in the space provided.
Line 3. Provide a detailed description of
the covered acceleration event in the
space provided.

Part IV – Report of Unpaid
Section 965(h) Net Tax
Liability Being Assumed
Line 4. Enter the dollar amount of the
transferor's section 965(h) net tax liability
remaining unpaid.
Note. The amount of the transferor's
section 965(h) net tax liability is subject to
adjustment by the Commissioner. See
Regulations section 1.965-7(b)(3)(iii)(B)(4)
(iv).

Line 5. Enter the date the next installment
payment is due by the transferee in the
space provided. The transferee must
make an annual installment payment for
the section 965(h) net tax liability they
assume by the due date of their income
tax return. See Regulations section
1.965-7(b)(3)(iii)(D) for details.

Part V – Eligible Section
965(h) Transferee’s Ability
To Pay Remaining Liability
Line 6. Check the “Yes” box to confirm
that the eligible section 965(h) transferee
is able to make the remaining payments
required under section 965(h) with respect
to the section 965(h) net tax liability being
assumed. If you check the “No” box, you
do not meet the requirements to enter into
a valid transfer agreement.
Line 7. Check the “Yes” box if the
leverage ratio of the eligible section 965(h)
transferee exceeds three to one.
Otherwise, check the “No” box. The
leverage ratio means the ratio that the
total indebtedness of the transferee bears
to the sum of its money and all other
assets reduced, but not below zero, by the
total indebtedness. See Regulations
section 1.965-7(b)(3)(iii)(B)(6) for more
information.
Note. The leverage ratio of the eligible
section 965(h) transferee is a factor the
Commissioner uses to determine whether
the eligible section 965(h) transferee has
the ability to pay the outstanding section
965(h) net tax liability. A leverage ratio in
excess of three to one does not by itself
determine whether or not a transfer
agreement is valid.
Line 8. Provide any other pertinent
information regarding the eligible section
965(h) transferee's ability to pay the
section 965(h) net tax liability being
assumed. This information may include,
but is not limited to, the adequacy of the
transferee's income, the value of the
transferee's assets, and the transferee's
access to capital.

Part VI – Terms of
Agreement

By signing this transfer agreement, the
eligible section 965(h) transferor and the
eligible section 965(h) transferee agree to
the terms set forth in Part VI of Form
965-C.

-2-

Transferor signature. This transfer
agreement (Form 965-C) must be signed
by a person who is authorized to sign a
return on behalf of the eligible section
965(h) transferor listed in Part I. By signing
Part VI, you declare, under penalties of
perjury, that you have examined the form,
and to the best of your knowledge and
belief, Parts I, III, and IV are true, correct,
and complete. You also certify that you
have the authority to execute this transfer
agreement.
Transferee signature. This transfer
agreement (Form 965-C) must also be
signed by a person who is authorized to
sign a return on behalf of the eligible
section 965(h) transferee listed in Part II.
By signing Part VI, you declare, under
penalties of perjury, that you have
examined the form, and to the best of your
knowledge and belief, Parts II, III, IV, and
V are true, correct, and complete. You
also certify that you have the authority to
execute this transfer agreement.

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Instructions for Form 965-C (12-2019)