How to Fill Out and File Form 965-A: Parts I–III and Schedule A

To fill out Form 965-A, you carry your Section 965 transition tax liability and every prior payment forward on a single cumulative ledger, complete Parts I through III and Schedule A, and attach the form to your income tax return for every year any portion of that liability is still outstanding.¹ The current-year installment payment is due on the unextended due date of that return, generally April 15 for calendar-year filers, even if you extend the return itself.²

Who Files the Form

Form 965-A is for individual taxpayers and entities taxed like individuals, including certain trusts and estates.³ You file it in any year your net 965 tax liability was outstanding at any point, which covers partners who picked up transition tax through a partnership, S corporation shareholders, and beneficiaries of trusts or estates that held interests in deferred foreign income corporations. Whether you received cash from the foreign company is irrelevant; owning a direct or indirect interest in a specified foreign corporation during the inclusion year is what created the liability.

Part I: Enter the Baseline Liability

Start with the total net Section 965 tax liability originally calculated on the return where you first reported the transition tax inclusion. That figure is your baseline, and every other number on the form flows from it.¹

If the IRS adjusted that amount through an examination, or you filed an amended return that changed the original liability, record the adjustment in the column for the tax year the change affects. Cross-check your baseline against your original return and any subsequent IRS notices before moving on. A wrong number here compounds through every installment column that follows.

Part II: Record Every Prior Payment

Part II is the running payment log. Enter the dollar amount paid for each prior installment year so the service can verify the current year’s payment against the schedule. Pull these numbers from your prior-year returns or payment confirmations rather than estimating. Subtracting the Part II running total from the Part I baseline shows exactly how much remains.¹

To know what the current year’s installment should be, apply the Section 965(h) percentages to the baseline:⁴

Installments 1 through 5: 8% each
Installment 6: 15%
Installment 7: 20%
Installment 8: 25%

The IRS charges no interest on installment payments made on time under the Section 965(h) election.⁵

Part III and Schedule A: Transfers and Per-Entity Detail

Part III captures any transfer agreement that shifted responsibility for the remaining installments to a different taxpayer, which typically happens when ownership of the entity generating the transition tax changes hands. Record the agreement date, the parties, and the portion of the liability transferred. Without a properly executed transfer agreement reported on the form, the IRS treats the original taxpayer as still liable.² If you inherited someone else’s liability through a transfer, you also inherit their installment schedule and remaining graduated percentages.

Schedule A breaks the liability down by each specific foreign corporation involved. Confirm every entity name and employer identification number matches the original filings; errors here cause processing delays at the service center.

How to File and Pay

Attach Form 965-A to your income tax return. E-filed returns include the form automatically; paper filers attach it to Form 1040.¹ Before filing, verify the current-year installment amount on Form 965-A matches what you report on the return itself.

The Electronic Federal Tax Payment System (EFTPS) is the most reliable payment method because it generates a confirmation number. If you mail a check, write the tax year and your Social Security number on it and include the appropriate payment voucher. Either way, check your IRS account transcript afterward to confirm the payment posted to the correct year. Misapplied Section 965 installment payments have been a known issue, and catching one early is far easier than unwinding it later.

What Can Accelerate the Whole Balance

Missing a single installment can accelerate the entire remaining balance, making it immediately due in full.⁵ Late payment is not the only trigger. Selling the underlying business, liquidating the entity, or, for S corporation shareholders, the company losing its S corporation status can also collapse the installment plan. Failure to comply with reporting and payment obligations can result in penalties and interest.⁶ The Internal Revenue Manual references a five-percent failure-to-report penalty for Section 965 compliance issues.

When You Stop Filing

For most taxpayers, the inclusion year was 2017 and the final 25% installment was due April 15, 2025. For taxpayers with a 2018 inclusion year, the final installment is due April 15, 2026.² You still file Form 965-A for the year the final payment is made, because the form must accompany your return for every year the liability was outstanding at any point.¹ Once the balance is paid in full and reflected on that year’s form, no further filings are required. Keep copies of every year’s Form 965-A and all payment confirmations for at least three years beyond the final installment, since any discrepancy in the cumulative record could reopen the issue.

1
Internal Revenue Service. Instructions for Form 965-A, Individual Report of Net 965 Tax Liability
2
Internal Revenue Service. General Section 965 Questions and Answers (Including Transfer and Consent Agreements)
3
Internal Revenue Service. About Form 965-A, Individual Report of Net 965 Tax Liability
4
Internal Revenue Service. href=”https://www.irs.gov/newsroom/general-section-965-questions-and-answers-including-transfer-and-consent-agreements” target=”_blank” rel=”noopener”>General Section 965 Questions and Answers (Including Transfer and Consent Agreements)
5
Internal Revenue Service. Liability Collection, Campus Procedures for IRC 965 – Transition Tax on Untaxed Foreign Earnings
6
Internal Revenue Service. Section 965 Transition Tax