IRS Form 966: When Corporations Must File It, How to Fill It Out, and Where to Mail It

IRS Form 966, Corporate Dissolution or Liquidation, tells the IRS that a corporation has adopted a resolution or plan to dissolve or liquidate any of its stock. It is due within 30 days after the plan is adopted. It is separate from the corporation's final income tax return.

Many owners skip it because they think the state dissolution paperwork covers it, or they confuse it with the final return. Here's what the form does, who has to file it, and how it fits into closing a business.

What is IRS Form 966 used for?

Form 966 is an information filing. It doesn't calculate tax and nothing is paid with it. Its purpose is to put the IRS on notice that a corporation plans to wind down, so the agency expects a final return and liquidating distributions to shareholders.

The requirement comes from Internal Revenue Code section 6043(a). That section covers both complete liquidations, where the whole corporation shuts down, and partial liquidations, where only some of the stock is redeemed.

Who has to file Form 966?

A corporation files it, or a farmers' cooperative, once it formally adopts a plan to dissolve or liquidate. That includes:

C corporations filing Form 1120
S corporations filing Form 1120-S
LLCs that elected to be taxed as a corporation, either C or S

The part people miss is that S corporations are not exempt. If you're closing an S corp, Form 966 is part of the process, along with the final 1120-S and final K-1s. Our S-corp and business tax services page covers the rest of that workload.

Does an LLC need to file Form 966?

It depends on how the LLC is taxed. An LLC taxed as a partnership (Form 1065) or a single-member LLC treated as a disregarded entity does not file Form 966. An LLC that elected corporate treatment on Form 8832 or Form 2553 generally does. If you're not sure how your entity is classified, S-Corp vs LLC: Which Structure Actually Fits Your Business? explains the difference.

Who is exempt?

The instructions list several exceptions. These include deemed liquidations, such as one triggered by a qualified subchapter S subsidiary (QSub) election or by a check-the-box election to become a disregarded entity. Tax-exempt organizations under section 501 and certain foreign corporations that aren't required to file Form 1120-F are also excluded. Check the current Form 966 instructions for the full list.

What is the Form 966 deadline?

File it within 30 days after the resolution or plan is adopted. The clock starts on the date the board or shareholders formally approve the plan, not the date the business stops operating and not the date the state approves the dissolution.

If the plan is later amended or supplemented, the corporation files another Form 966 within 30 days of that change.

How do you fill out Form 966?

The form is one page. Most of it is factual information pulled from the corporate records:

| Line | What it asks for |
|---|---|
| 1–2 | Date and place (state) of incorporation |
| 3 | Type of liquidation: complete or partial |
| 4 | Date the resolution or plan was adopted |
| 5 | IRS service center where the last return was filed |
| 6–7 | Tax year details, including the final tax year and consolidated return questions |
| 8 | Shares outstanding (common and preferred) when the plan was adopted |
| 9 | Dates of any amendments to the plan |
| 10 | Internal Revenue Code section the liquidation falls under |
| 11 | Date the original Form 966 was filed, if this one reports an amendment |

You must attach a certified copy of the resolution or plan, including any amendments. A corporate officer signs the form.

What goes on Form 966 line 10?

Line 10 asks for the Code section that governs the dissolution or liquidation. For most closely held businesses that's section 331, which treats what shareholders receive as payment in exchange for their stock. Section 332 applies when a parent corporation liquidates a subsidiary it owns at least 80% of. The section matters because it determines how the distributions are taxed, so confirm it with whoever prepares the final return before you file.

Where do you mail Form 966?

Form 966 goes to the IRS service center where the corporation files its income tax return. In plain terms, use the same address the corporation would use for its Form 1120 or 1120-S. That address depends on the state where the business is located and, in some cases, the size of its assets.

The IRS updates mailing addresses from time to time. Before you send it, check the current "Where to File" table in the Form 1120 or 1120-S instructions. Use certified mail with return receipt so you have proof of the filing date. The fillable Form 966 PDF and its instructions are on IRS.gov. Download them there and not from a third-party site, so you get the current revision.

What happens if you file Form 966 late?

Form 966 doesn't carry a large automatic penalty the way a late income tax return does. It is still a legal requirement, though, and a missing one can create friction when the IRS sees a final return or liquidating distributions it wasn't expecting.

If you missed the 30-day window, the usual approach is to file the form now with the certified resolution attached and not let the gap grow. If the corporation has also missed other deadlines, Missed the Tax Filing Deadline? Here's What to Do Now lays out the order of operations. If IRS notices have already started arriving, our IRS and state tax problem help is built for that.

What else is required to close a corporation?

Form 966 is only one item on the list. A complete federal wind-down usually also includes:

Final income tax return. Check the "final return" box on Form 1120 or 1120-S. For S corps, issue final Schedules K-1.
Liquidating distributions. Report them to shareholders on Form 1099-DIV (cash and noncash liquidation boxes) when required. If contractors were paid in the final year, the usual 1099 rules still apply. See Do I Need to Send 1099s to My Contractors?.
Final payroll filings. These include the last Form 941 or 944, Form 940, and W-2s if the corporation had employees, including owner-employees.
Asset sale reporting. Selling the business assets may require Form 8594 or Form 4797.
State dissolution. You'll need a separate filing with your state's secretary of state, and often a tax clearance or final return with your state's tax agency.

Clean books make all of this much faster. If the final-year records are a mess, catching up on monthly bookkeeping before preparing the final return usually saves time. It also cuts down on amended filings later.

Should you plan the liquidation before adopting the resolution?

Usually, yes. When and how assets come out of a corporation affects who pays tax and how much. Assets that have gone up in value, built-in gains for former C corps that converted to S status, and the shareholders' stock basis all affect the outcome. Many owners find it worth running the numbers through tax planning before the board signs anything, because the Form 966 clock starts the day it does.

Frequently asked questions

Can Form 966 be filed electronically?

Form 966 has traditionally been filed on paper and mailed to the IRS service center. Check the current instructions on IRS.gov to see whether an electronic option is available for your filing.

Does an S corporation need to file Form 966?

Yes. S corporations that adopt a plan to dissolve or liquidate are subject to the same Form 966 requirement as C corporations.

Is Form 966 the same as the final tax return?

No. Form 966 only notifies the IRS of the plan to dissolve. The corporation still files a final Form 1120 or 1120-S with the "final return" box checked.

Do I need to file Form 966 for a single-member LLC?

Not if the LLC is taxed as a disregarded entity or a partnership. It's generally required only when the LLC elected to be taxed as a corporation.

What do I attach to Form 966?

Attach a certified copy of the resolution or plan of dissolution or liquidation, plus any amendments or supplements to it.

Next step: close the corporation in the right order

The order that tends to work well: plan the tax treatment, adopt the resolution, file Form 966 within 30 days, finalize the books, then file the final federal and state returns. SBZ Tax handles corporate wind-downs for clients nationwide, from the Form 966 through the final 1120-S and K-1s. Call SBZ Tax at 818-748-2020, visit the office, or book a free consultation to work through your situation.

This article is general information, not tax advice for your specific situation. Talk to a qualified tax professional before dissolving or liquidating a corporation.