The IRS has significantly changed the filing procedures for Form 8806, or the Information Return for Acquisition of Control or Substantial Change in Capital Structure. Until further notice, submissions of this form must now be sent via fax, as they will no longer be accepting it via mailing.
The change can be confusing and overwhelming for those accustomed to the traditional process. This post will provide a guide on how to fax Form 8806, including how to make the process seamless with online fax.
Whether you’re a business owner, accountant, or tax preparer, this post will have something for you. Let’s get started.
Table of Contents
What is Form 8806?
Form 8806 is an IRS form used to report the acquisition of control or a substantial change in capital structure. It is typically used by businesses that have changed ownership or management, such as a merger or acquisition. The form is used to report the allocation of assets and liabilities among the partners or shareholders of an organization.
For example, company X was a partnership, and it was acquired by company A. As a result, the structure of company X changed, and now it is controlled by company A.
As per the IRS regulations, company XYZ needs to file Form 8806 to report this acquisition of control and change in capital structure. Form 8806 is filed as an attachment to the business’s tax return. It is used to calculate the tax basis of the assets and liabilities.
What is the acquisition of control of a corporation?
Acquisition of control of a corporation refers to the following:
- An individual or entity obtaining an ownership stake in a corporation
- Obtaining voting power in a corporation
- Purchasing shares of stock
- Acquiring assets
- Merging with the corporation
- Ability to influence and determine the direction and decision-making of the corporation
- Possession of at least 50% of collective voting power in all classes of stock that are qualified to vote
What is a substantial change in the capital structure of a corporation?
A substantial change in the capital structure of a corporation can include the following events:
- Issuing new shares of stock
- Issuing debt
- Issuing stock options
- Issuing convertible debt
- Change in ownership of the corporation
- Change in proportion of shares held by different shareholders
Who Needs to Submit Form 8806?
Form 8806 must be filed by a reporting corporation that has experienced an acquisition of control or a substantial change in its capital structure. Form 8806 should be filed within 45 days of purchasing power or a substantial variance in the capital structure or no later than January 5th of the following calendar year.
Failure to file Form 8806 on time can result in fines and penalties from the IRS. The corporation may face a fine of up to $500 for each day late, with a maximum penalty of $100,000. Therefore, it is essential to submit the form as soon as possible. Corporations are not obligated to file Form 8806 for transactions outlined here.
Online Faxing vs Traditional Faxing of IRS Tax Forms
Reporting corporations must now submit Form 8806 via fax instead of mailing it. You can use a traditional faxing method, but there is a more efficient way. Online faxing is a reliable, secure, and cost-effective alternative to using fax machines to file your IRS forms.
Online faxing services allow you to quickly and securely send documents via the internet. You don’t need any physical hardware, such as a fax machine or phone line, and you can access your documents anywhere.
Here are more reasons why you should use a digital fax service to send your Form 8806:
Online faxing service providers, like iFax, often provide secure fax methods and end-to-end encryption, which can help protect your sensitive information.
Online faxing allows you to send documents from anywhere, as long as you have an internet connection. This can be more convenient than going to a physical location to send a fax via a traditional fax machine.
Instant tracking and confirmation
Many online faxing services include features that allow you to track the delivery of your fax and confirm that the IRS received it. This can provide added peace of mind and ensure that your tax forms have been received and processed.
Online faxing services can often convert documents to fax-friendly formats. This can help ensure that your forms are legible and easy to read when they reach the IRS.
Online faxing services are less expensive than traditional faxing methods since you don’t need to pay for a telephone line or the cost of paper, ink, or toner.
Faxing Form 8806 to the IRS Online
Now that you understand why online faxing is the better choice for filing taxes, let’s look at how to fax Form 8806 online. Say, iFax is your digital fax service of choice:
- Log in to your iFax account or sign up for one.
- You’ll see the New Fax button on the lower right corner of the screen. Click it.
- A window will appear that shows the first page of your fax. Enter the IRS’s fax number: 844-249-6232, IRS as the recipient’s name, and your name in the designated fields. You can add your corporation’s logo, a customized message for IRS, or make changes in the fax settings, such as page size.
- Scroll down to see the Drop unlimited attachment button or navigate to the clip icon on the upper right of the fax page. Click and select the file containing the tax form you wish to send.
- After the upload completes, preview your document and check the information you provided to ensure accuracy.
- Click Send Now or Schedule later button to submit the form. A popup window will appear, confirming that the fax was successfully sent.
- To notify the IRS via email, enter their email address in the provided field in the popup window.
Start Online Fax for Form 8806 Using iFax
Choosing iFax as your preferred faxing service for tax-related forms is the best choice due to its comprehensive security measures. Your documents are safe from unauthorized access with our military-grade encryption and authentication of documents to comply with data privacy laws.
On top of that, we offer our corporations:
- An instant transmission receipt for their faxes to ensure an extra layer of tracking
- Encrypted fax transmissions for keeping peace of mind
- Secure cloud storage for storing all documents in a central location
- Flexible pricing plans with no overage fees
- Easy setup and no installation costs
With these features offered by iFax, you can be sure that your tax forms are safe. Sign up now to start faxing.