IRS Instruction 8966 – IRS Forms, Instructions, Pubs 2026 – In today’s global economy, compliance with international tax regulations is essential for financial institutions and entities dealing with U.S. accounts. One key component is the Foreign Account Tax Compliance Act (FATCA), which aims to prevent tax evasion by U.S. persons holding assets abroad. At the heart of this is Form 8966, the FATCA Report, and its accompanying IRS Instruction 8966. This article provides a comprehensive, up-to-date overview of IRS Instruction 8966, covering everything from who must file to step-by-step filing procedures. Whether you’re a foreign financial institution (FFI), withholding agent, or sponsoring entity, understanding these instructions ensures smooth compliance for the 2025 tax year, with filings due in 2026.
What Is FATCA and Form 8966?
FATCA, enacted under Chapter 4 of the Internal Revenue Code (sections 1471–1474), requires foreign financial institutions to report information about U.S. accounts to the IRS. This helps the U.S. government identify and collect taxes on foreign assets held by U.S. taxpayers. Form 8966 is the official report used for this purpose, detailing U.S. accounts, substantial U.S. owners of passive non-financial foreign entities (NFFEs), and other relevant information.
IRS Instruction 8966 provides detailed guidance on completing and filing Form 8966. The latest version, revised for 2025 and updated on December 19, 2025, includes clarifications on reporting requirements, definitions, and procedures. Key elements include reporting on financial accounts like depository accounts, custodial accounts, equity or debt interests, and certain insurance contracts, while excluding low-value accounts (under $50,000) or specific retirement plans.
Who Must File Form 8966?
Not every entity is required to file Form 8966—eligibility depends on your status under FATCA regulations. Here’s a breakdown:
- Participating FFIs (PFFIs): Including U.S. branches not treated as U.S. persons, these must report U.S. accounts, accounts held by owner-documented FFIs (ODFFIs), and recalcitrant account holders.
- Registered Deemed-Compliant FFIs (RDCFFIs): File as a condition of their deemed-compliant status for specific accounts.
- Reporting Model 2 FFIs: Report U.S. accounts and non-consenting U.S. accounts directly to the IRS.
- Qualified Intermediaries (QIs), Withholding Foreign Partnerships (WPs), or Withholding Foreign Trusts (WTs): Report on accounts, partners, beneficiaries, or owners under their agreements.
- Direct Reporting NFFEs: Report substantial U.S. owners or certify that none exist.
- Sponsoring Entities: File on behalf of sponsored FFIs or sponsored direct reporting NFFEs.
- Trustees of Trustee-Documented Trusts: Report U.S. accounts under Model 2 Intergovernmental Agreements (IGAs).
- Withholding Agents (Non-FFIs): Report substantial U.S. owners of passive NFFEs or specified U.S. persons in ODFFIs receiving withholdable payments.
Note: Reporting Model 1 FFIs report to their local tax authorities under Model 1 IGAs and do not file Form 8966 with the IRS. Sponsored entities are exempt if a sponsoring entity handles reporting. For mergers or acquisitions, combined reporting may be allowed if specific regulatory conditions are met.
Filing Requirements and Deadlines for 2026
For the 2025 calendar year, Form 8966 must be filed by March 31, 2026. If the date falls on a weekend or holiday, it shifts to the next business day. Reporting Model 2 FFIs follow the same timeline unless their Model 2 IGA specifies otherwise.
Extensions
You can request an automatic 90-day extension using Form 8809-I, filed by the original due date. A second 90-day extension is available for hardships. However, no extensions apply to non-consenting U.S. accounts for Reporting Model 2 FFIs—check your specific IGA.
Electronic vs. Paper Filing
Electronic filing is mandatory for all financial institutions, regardless of the number of forms. Use the IRS International Data Exchange Service (IDES) system, following guidelines in Publication 5124 for data fields and Publications 5190 or 5188 for submission. Waivers for electronic filing require Form 8508-I, submitted at least 45 days before the due date. Paper filings (if approved) go to the IRS FATCA address in Austin, TX, accompanied by Form 8966-C.
Report amounts in U.S. dollars or the original currency (using ISO 4217 codes), rounded to the nearest whole unit. Use a unique three-digit identifier for each paper form.
How to Complete Form 8966: Step-by-Step?
Form 8966 is divided into five parts. File a separate form for each substantial U.S. owner, specified U.S. person, or pooled account group.
- Part I: Identification of Filer: Enter your name, address, Global Intermediary Identification Number (GIIN), TIN, and filer category code (e.g., 01 for PFFI, 04 for Reporting Model 2 FFI).
- Part II: Account Holder or Payee Information: Provide details like name, address, TIN, and account type (e.g., specified U.S. person).
- Part III: Owner Information: For passive NFFEs or ODFFIs, list each substantial U.S. owner’s name, address, and TIN.
- Part IV: Financial Information: Report account numbers, balances or values, and payments (interest, dividends, gross proceeds, other income) in the specified currency.
- Part V: Pooled Reporting Type: For recalcitrant or non-consenting accounts, indicate the category, number of accounts, and aggregate balances.
If there are no reportable accounts (e.g., for Direct Reporting NFFEs with no substantial U.S. owners), check the appropriate box and complete only Part I.
Handling Corrections and Amendments
Errors happen—here’s how to fix them:
- Corrected Reports: File a new Form 8966 with the “Corrected report” box checked, using the same method as the original.
- Amended Reports: Submit a new form with “Amended report” checked, along with a voided copy of the original (check “Voided report”).
Always match the filing method (electronic or paper) of the original report.
Penalties for Non-Compliance
Failing to file electronically without a waiver can trigger penalties under sections 6721–6724. Broader FATCA non-compliance may result in 30% withholding on payments or other enforcement actions. Stay compliant by reviewing updates on IRS.gov/FATCA.
Recent Updates in IRS Instruction 8966 for 2025
The 2025 revision includes reminders on pooled reporting for non-consenting U.S. accounts under Model 2 IGAs and clarifications for U.S. branches and sponsoring entities. No major legislative changes were noted post-publication, but check IRS.gov for developments.
Frequently Asked Questions About Form 8966
| Question | Answer |
|---|---|
| What is a GIIN? | A Global Intermediary Identification Number assigned to registered FFIs for FATCA compliance. |
| Can I file on paper? | Only with an approved waiver; electronic filing is required for FFIs. |
| What if I have no U.S. owners? | Direct Reporting NFFEs can file a nil report by checking the box in Part I. |
| How do I report joint accounts? | File separate forms for each specified U.S. person. |
| Where can I find more FATCA resources? | Visit IRS.gov/FATCA for FAQs and updates. |
Conclusion: Stay Compliant with FATCA Reporting
Navigating IRS Instruction 8966 and Form 8966 doesn’t have to be overwhelming. By understanding your filing obligations and using the latest guidance, you can avoid penalties and ensure accurate FATCA reporting. For personalized advice, consult a tax professional. Remember, the IRS provides extensive resources, including the full instructions and related forms, to support your compliance efforts.