Instructions for Form

Instructions for Form

1120-SF

(Rev. December 2025)

U.S. Income Tax Return for Settlement Funds

Section references are to the Internal Revenue Code

unless otherwise noted.

Future Developments

For the latest information about developments related to

Form 1120-SF and its instructions, such as legislation

enacted after they were published, go to IRS.gov/

Form1120SF.

What’s New

Form 1120-SF. Use the December 2025 revision of Form

1120-SF and instructions for 2025 and subsequent years

until a superseding revision of Form 1120-SF is issued.

Increase in penalty for failure to file. For tax returns

required to be filed after 2025, the minimum penalty for

failure to file a return that is more than 60 days late has

increased to the lesser of the tax due or $525 (adjusted for

inflation). See Late filing of return, later.

Electronic payments. If the fund has access to U.S.

banking services or electronic payment systems, it should

use direct deposit for any refunds and pay electronically

for any payments, whenever possible.

Direct deposit. Direct deposit fields have been added

to the form on lines 20c, 20d, and 20e. If there is an

overpayment on line 19, enter the amount the fund wants

refunded on line 20b and complete the direct deposit

information on lines 20c, 20d, and 20e. Instead of a direct

deposit of the fund’s refund, it can still choose to have all

or part of the overpayment credited to next year’s

estimated tax by completing line 20a. See Line 19, later,

for more information.

Making a payment. If there is a balance due on

line 18, go to IRS.gov/Payments for information on how to

make a payment. See Tax Payments and the instructions

for line 18, later, for more details.

General Instructions

Purpose of Form

Use Form 1120-SF to report transfers received, income

earned, deductions claimed, and distributions made, and

to figure the income tax liability of a designated or

qualified settlement fund.

Who Must File

All section 468B designated and qualified settlement

funds must file an annual income tax return on Form

1120-SF.

When To File

Generally, a settlement fund must file its income tax return

by the 15th day of the 4th month after the end of its tax

year.

However, a fund with a fiscal tax year ending on June

30 must file by the 15th day of the 3rd month after the end

of its tax year. A fund with a short tax year ending in June

will be treated as if the short year ended on June 30, and

must file by the 15th day of the 3rd month after the end of

its tax year.

If the due date falls on a Saturday, Sunday, or legal

holiday, the fund may file on the next business day.

Private delivery services (PDSs). Settlement funds can

use certain PDSs designated by the IRS to meet the

“timely mailing as timely filing” rule for tax returns. See the

Instructions for Form 1120, U.S. Corporation Income Tax

Return, for details.

Caution: PDSs can’t deliver items to P.O. boxes. The

fund must use the U.S. Postal Service to mail any item to

an IRS P.O. box address.

Extension of time to file. File Form 7004, Application for

Automatic Extension of Time To File Certain Business

Income Tax, Information, and Other Returns, to request an

extension of time to file. Generally, the settlement fund

must file Form 7004 by the regular due date of the return.

See the Instructions for Form 7004.

Who Must Sign

The return must be signed and dated by the administrator

of the fund.

Paid Preparer Use Only section. If an employee of the

fund completes Form 1120-SF, the paid preparer section

should remain blank. Anyone who prepares Form

1120-SF but doesn’t charge the fund shouldn’t complete

that section. Generally, anyone who is paid to prepare the

return must sign and complete the section.

The paid preparer must complete the required preparer

information and:

• Sign the return in the space provided for the preparer’s

signature,

• Include their Preparer Tax Identification Number (PTIN),

and

• Give a copy of the return to the administrator.

A paid preparer may sign original or amended returns

by rubber stamp, mechanical device, or computer

software program.

Paid Preparer Authorization

If the fund wants to allow the IRS to discuss its tax return

with the paid preparer who signed it, check the “Yes” box

Dec 9, 2025

Instructions for Form 1120-SF (Rev. 12-2025) Catalog Number 14988X

Department of the Treasury Internal Revenue Service www.irs.gov

in the signature area of the return. This authorization

applies only to the individual whose signature appears in

the Paid Preparer Use Only section of the fund’s return. It

doesn’t apply to the firm, if any, shown in that section.

extensions). See the instructions for line 18, later. If the

due date falls on a Saturday, Sunday, or legal holiday, the

payment is due on the next day that isn’t a Saturday,

Sunday, or legal holiday.

If the “Yes” box is checked, the fund is authorizing the

IRS to call the paid preparer to answer any questions that

may arise during the processing of its return. The fund is

also authorizing the paid preparer to:

• Give the IRS any information that is missing from the

return;

• Call the IRS for information about the processing of the

return or the status of any related refund or payment(s);

and

• Respond to certain IRS notices about math errors,

offsets, and return preparation.

Electronic Deposit Requirement

The fund isn’t authorizing the paid preparer to receive

any refund check, bind the fund to anything (including any

additional tax liability), or otherwise represent the fund

before the IRS.

The authorization will automatically end no later than

the due date (excluding extensions) for filing the fund’s

subsequent tax return. If the fund wants to expand the

paid preparer’s authorization or revoke the authorization

before it ends, see Pub. 947, Practice Before the IRS and

Power of Attorney.

Assembling the Return

To ensure that the fund’s tax return is correctly processed,

attach all schedules after page 2 of Form 1120-SF in

alphabetical order followed by other forms in numerical

order.

Complete every applicable entry space on Form

1120-SF. Don’t enter “See Attached” or “Available Upon

Request” instead of completing the entry spaces. If more

space is needed on the forms or schedules, attach

separate sheets using the same size and format as the

printed forms.

If there are supporting statements and attachments,

arrange them in the same order as the schedules or forms

they support and attach them last. Show the totals on the

printed forms. Enter the fund’s name and employer

identification number (EIN) on each supporting statement

or attachment.

Tax Payments

Generally, the fund must pay any tax due in full no later

than the due date for filing its tax return (not including

Settlement funds must use electronic funds transfer (EFT)

to make all federal tax deposits (such as deposits of

employment, excise, and income taxes). An EFT can be

made using the Electronic Federal Tax Payment System

(EFTPS) or the fund’s IRS business tax account. However,

if the fund doesn’t want to use one of these methods, it

can arrange for its tax professional, financial institution,

payroll service, or other trusted third party to make

deposits on its behalf. Also, it may arrange for its financial

institution to submit a same-day wire payment (discussed

below) on its behalf. EFTPS is a free service provided by

the Department of the Treasury. Payments made using the

fund’s IRS business tax account are also free. Services

provided by a tax professional, financial institution, payroll

service, or other third party may have a fee.

To get more information about EFTPS or to enroll in

EFTPS, go to EFTPS.gov or call 800-555-4477. To

contact EFTPS using Telecommunications Relay Services

(TRS) for people who are deaf, hard of hearing, or have a

speech disability, dial 711 and then provide the TRS

assistant the 800-555-4477 number above or

800-733-4829. Additional information about EFTPS is also

available in Pub. 966.

For more information about making an EFT through the

fund’s IRS business tax account, go to IRS.gov/

BusinessAccount.

Depositing on time. EFTPS accepts same day

payments of $1 million or less if the payment is submitted

before 3:00 p.m. Eastern time on a business day. If the

fund’s payment is more than $1 million, the fund must

submit the deposit by 8:00 p.m. Eastern time the day

before the date the deposit is due. If the fund uses a third

party to make deposits on its behalf, they may have

different cutoff times.

Same-day wire payment option. If the fund fails to

submit a timely deposit transaction on EFTPS, it can still

make its deposit on time by using the Federal Tax

Collection Service (FTCS). To use the same-day wire

payment method, the fund will need to make

arrangements with its financial institution ahead of time

regarding availability, deadlines, and costs. Financial

institutions may charge a fee for payments made this way.

Where To File

File the fund’s return at the applicable IRS address listed below.

If the fund’s principal business, office, or agency is located in:

The United States

Use the following address:

Department of the Treasury

Internal Revenue Service Center

Ogden, UT 84201-0012

A foreign country or U.S. territory

Internal Revenue Service Center

P.O. Box 409101

Ogden, UT 84409

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Instructions for Form 1120-SF (Rev. 12-2025)

To learn more about the information the fund will need to

provide to its financial institution to make a same-day wire

payment, go to IRS.gov/SameDayWire.

Estimated Tax Payments

Generally, the following rules apply to the fund’s payments

of estimated tax.

• A fund must make installment payments of estimated

tax if it expects its total tax for the year (less applicable

credits) to be $500 or more.

• The installments are due by the 15th day of the 4th, 6th,

9th, and 12th months of the tax year. If any date falls on a

Saturday, Sunday, or legal holiday, the installment is due

on the next regular business day.

• The fund must use EFTs to make installment payments

of estimated tax.

• If, after the fund figures and deposits estimated tax, it

finds that its tax liability for the year will be more or less

than originally estimated, it may have to refigure its

required installments. If earlier installments were

underpaid, the fund may owe a penalty. See the

instructions for line 17, later.

• If the fund overpaid estimated tax, it may be able to get

a quick refund by filing Form 4466, Corporation

Application for Quick Refund of Overpayment of

Estimated Tax.

See section 6655 for more information on how to figure

estimated taxes.

Interest and Penalties

Interest. Interest is charged on taxes paid late even if an

extension of time to file is granted. Interest is also charged

on penalties imposed for failure to file, negligence, fraud,

substantial valuation misstatements, substantial

understatements of tax, and reportable transaction

understatements from the due date (including extensions)

to the date of payment. The interest charge is figured at a

rate determined under section 6621.

Late filing of return. A fund that doesn’t file its tax return

by the due date, including extensions, may be penalized

5% of the unpaid tax for each month or part of a month the

return is late, up to a maximum of 25% of the unpaid tax.

The minimum penalty for a tax return that is more than 60

days late is the lesser of the tax due or $525 (adjusted for

inflation). Go to IRS.gov/Newsroom/Inflation-Adjusted-TaxItems-by-Tax-Year for adjusted failure-to-file penalty

amounts for the applicable tax year. The penalty won’t be

imposed if the fund can show that the failure to file on time

was due to reasonable cause. See Reasonable-cause

determinations, later.

Late payment of tax. A fund that doesn’t pay the tax

when due may generally be penalized 1/2 of 1% of the

unpaid tax for each month or part of a month the tax isn’t

paid, up to a maximum of 25% of the unpaid tax. The

penalty won’t be imposed if the fund can show that the

failure to pay on time was due to reasonable cause. See

Reasonable-cause determinations, later.

Trust fund recovery penalty. This penalty may apply if

certain excise, income, social security, and Medicare

taxes that must be collected or withheld aren’t collected or

withheld, or these taxes aren’t paid. The trust fund

Instructions for Form 1120-SF (Rev. 12-2025)

recovery penalty may be imposed on all persons who are

determined by the IRS to have been responsible for

collecting, accounting for, and paying over these taxes,

and who acted willfully in not doing so. The penalty is

equal to the full amount of the unpaid trust fund tax. See

the Instructions for Form 720, Quarterly Federal Excise

Tax Return, or Pub. 15, Employer’s Tax Guide, for details,

including the definition of “responsible persons.”

Other penalties. Other penalties can be imposed for

negligence, substantial understatements of tax, reportable

transaction understatements, and fraud. See sections

6662, 6662A, and 6663.

Reasonable-cause determinations. If the fund receives

a notice about penalties after it files its return, send the

IRS an explanation, and we will determine if the fund

meets the reasonable-cause criteria. Don’t attach an

explanation when the fund files its return.

Accounting Method

A designated or qualified settlement fund must use the

accrual method of accounting.

Rounding Off to Whole Dollars

The fund may enter decimal points and cents when

completing its return. However, the fund should round off

cents to whole dollars on its return and schedules to make

completing its return easier. The fund must either round

off all amounts on its return to whole dollars, or use cents

for all amounts. To round, drop amounts under 50 cents

and increase amounts from 50 cents to 99 cents to the

next dollar. For example, $1.39 rounds to $1 and $2.50

rounds to $3.

If two or more amounts must be added to figure the

amount to enter on a line, include cents when adding the

amounts and round off only the total.

Recordkeeping

Keep the fund’s records for as long as they may be

needed for the administration of any provision of the

Internal Revenue Code. Usually, records that support an

item of income, deduction, or credit on the return must be

kept for 3 years from the date the return is due or filed,

whichever is later. Keep records that verify the fund’s basis

in property for as long as they are needed to figure the

basis of the original or replacement property.

The fund should keep copies of all filed returns. They

help in preparing future and amended returns.

Additional Information

See the Instructions for Form 1120 and Pub. 542,

Corporations, for more information about corporations,

including additional forms the fund may need to file and

how to get forms and publications.

Definitions

Qualified Settlement Fund

A fund, account, or trust (“a fund”) is a qualified settlement

fund if it meets the following requirements.

• Governmental order or approval requirement.

• Resolve or satisfy requirement.

• Segregation requirement.

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Governmental order or approval requirement. To

meet this requirement, the fund must be ordered by, or

approved by, the United States, any state (including the

District of Columbia), territory, or political subdivision

thereof, or any agency or instrumentality (including a court

of law) of any of the foregoing, and it must be subject to

the continuing jurisdiction of that governmental authority.

A fund is ordered by or approved by a governmental

authority when the authority issues its initial or preliminary

order to establish, or grants its initial or preliminary

approval of, the fund, even if that order or approval may be

subject to review or revision. Generally, a governmental

authority’s order or approval has no retroactive effect and

doesn’t permit a fund to be a qualified settlement fund

prior to the date the order is issued or the approval is

granted. However, see Relation-back rule, later.

Arbitration panels. An arbitration award that orders the

establishment of, or approves, a fund is an order or

approval of a governmental authority if:

• The arbitration award is judicially enforceable;

• The arbitration award is issued following a bona fide

arbitration proceeding in accordance with rules approved

by a governmental authority (such as self-regulatory

organization-administered arbitration proceedings in the

securities industry); and

• The fund is subject to the continuing jurisdiction of the

arbitration panel, the court of law that has jurisdiction to

enforce the arbitration award, or the governmental

authority that approved the rules of the arbitration

proceedings.

Resolve or satisfy requirement. To meet this

requirement, a fund must be established to resolve or

satisfy one or more contested or uncontested claims that

have resulted, or may result, from an event (or a series of

related events) that has occurred and that has given rise

to at least one claim asserting liability:

• Under the Comprehensive Environmental Response,

Compensation, and Liability Act of 1980 (CERCLA), as

amended for settlement funds created before May 18,

2006;

• Arising out of a tort, breach of contract, or violation of

law; or

• Designated by the IRS in a revenue ruling or revenue

procedure.

Generally, a fund doesn’t meet the resolve or satisfy

requirement if it is established to resolve or satisfy a

liability to provide property or services unless the

transferor’s obligation to provide property or services is

extinguished by a transfer or transfers to the fund.

Note: Settlement funds created after May 17, 2006, for

the purpose of resolving or satisfying liabilities under the

CERCLA are exempt from tax. See section 468B(g)(2) for

more information.

Segregation requirement. To meet this requirement, the

fund must (a) be a trust under applicable state law, or (b)

keep its assets segregated from other assets of the

transferor (and related persons). For example, cash held

by a transferor in a separate bank account satisfies the

segregation requirement.

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Classification of fund prior to meeting all three requirements. If a fund meets the resolve or satisfy

requirement, the assets of the fund are treated as owned

by the transferor of those assets until the fund also meets

the governmental order or approval requirement and the

segregation requirement. On the day the fund meets all

three requirements, the transferor is treated as transferring

the assets to a qualified settlement fund.

Relation-back rule. If a fund meets the resolve or satisfy

requirement and the segregation requirement before it

meets the governmental order or approval requirement,

the transferor and the administrator (defined later) may

jointly elect the relation-back election (defined below) to

treat the fund as coming into existence as a qualified

settlement fund on the later of (a) the date the fund meets

the resolve or satisfy requirement and the segregation

requirement, or (b) January 1 of the calendar year in

which all three requirements are satisfied.

If a relation-back election is made, the assets held by

the fund on the date the qualified settlement fund is

treated as coming into existence are treated as transferred

to the qualified settlement fund on that date.

Relation-back election. Make the relation-back election

by attaching a copy of the election statement to Form

1120-SF for the tax year in which the qualified settlement

fund is treated as coming into existence. The statement

must be signed by each transferor and the administrator.

File Form 1120-SF and the election statement by the due

date of Form 1120-SF, including extensions. The election

statement must contain the following.

• The words “Regulations section 1.468B-1

Relation-Back Election” at the top of the first page.

• The name, address, and identifying number of each

transferor.

• The name, address, and EIN of the qualified settlement

fund.

• The date on which the qualified settlement fund is

treated as coming into existence.

• A schedule describing each asset treated as transferred

to the fund on the date the fund is treated as coming into

existence. The schedule of assets doesn’t have to identify

the amount of cash or the property transferred by a

particular transferor.

Qualified settlement fund treated as a corporation.

Except as otherwise provided in Regulations section

1.468B-5(b), for purposes of subtitle F of the Internal

Revenue Code, a qualified settlement fund is treated as a

corporation and any tax imposed under Regulations

section 1.468B-2(a) is treated as a tax imposed by section

11. See Regulations section 1.468B-2(k) for more

information.

Designated Settlement Fund

A fund, account, or trust is a designated settlement fund if

it meets the following requirements.

• It is established by a court order and completely

extinguishes the taxpayer’s tort liability.

• No amounts may be transferred to it other than in the

form of a qualified payment (defined below).

• It must be administered by persons, a majority of whom

are independent of the taxpayer.

Instructions for Form 1120-SF (Rev. 12-2025)

• It is established for the principal purpose of resolving

and satisfying present and future claims against the

taxpayer arising out of personal injury, death, or property

damage.

• The taxpayer (or any related person) may not hold any

beneficial interest in the income or corpus of it.

• The taxpayer elects to have it treated as a designated

settlement fund.

post office doesn’t deliver mail to the street address and

the fund has a P.O. box, enter the box number instead.

Qualified payment. A qualified payment is any money or

property that is transferred to a designated settlement

fund under a court order other than the following.

• Any amount that may be transferred from the fund to the

taxpayer (or any related person).

• The transfer of any stock or indebtedness of the

taxpayer (or any related person).

If the fund receives its mail in care of a third party (such

as an accountant or an attorney), enter on the street

address line “C/O” followed by the third party’s name and

street address or P.O. box.

Note: A designated settlement fund is taxed in the same

manner as a qualified settlement fund. In addition, if a

fund doesn’t meet the requirements of a designated

settlement fund but does meet the requirements of a

qualified settlement fund, the fund is treated as a qualified

settlement fund.

Other Definitions

Administrator. An administrator, which may include a

trustee if the designated or qualified settlement fund is a

trust, is (in order of priority) any of the following.

• The person designated or approved by the

governmental authority that ordered or approved the fund.

• The person designated in the escrow agreement,

settlement agreement, or other similar agreement

governing the fund.

• The escrow agent, custodian, or other person in

possession of the fund’s assets.

• The transferor or, if there are multiple transferors, all of

the transferors unless an agreement is signed by all of the

transferors that designates a single transferor as the

administrator.

Transferor. A transferor is a person who transfers (or on

whose behalf an insurer or other person transfers) money

or property to a settlement fund to resolve or satisfy claims

against that person.

Don’t use the address of the registered agent for the

state in which the fund is incorporated. For example, if a

fund is incorporated in Delaware or Nevada and the fund’s

principal office is located in Little Rock, Arkansas, the fund

should enter the Little Rock address.

If the fund has a foreign address, enter the city or town,

state or province, country, and foreign postal code in the

spaces provided. Don’t abbreviate the country name.

Follow the country’s practice for entering the name of the

state or province and postal code.

Employer Identification Number (EIN)

Enter the fund’s EIN. If the fund doesn’t have an EIN, it

must apply for one. An EIN can be applied for in the

following ways.

• Online—Go to IRS.gov/EIN. The EIN is issued

immediately once the application information is validated.

• By faxing or mailing Form SS-4, Application for

Employer Identification Number.

If the fund hasn’t received its EIN by the time the return

is due, write “Applied For” in the space for the EIN and the

date the fund applied in the space for the EIN. For more

details, see the Instructions for Form SS-4.

Final Return, Name Change, Address

Change, or Amended Return

Indicate a final return, name change, address change, or

amended return by checking the appropriate box. If a

change in address occurs after the return is filed, use

Form 8822-B, Change of Address or Responsible Party —

Business, to notify the IRS. See the instructions for Form

8822-B for details.

Part I. Income and Deductions

Related person. A related person is any person who is

related to the transferor within the meaning of section

267(b) or section 707(b)(1).

Income

Specific Instructions

Line 1. Taxable interest. Enter total taxable interest

received or accrued during the tax year, including any

original issue discount (OID) or market discount that is

includible in income during the tax year. If the fund

acquired a taxable bond at a premium and elects to

amortize bond premium on taxable bonds under section

171, only report the net amount of taxable stated interest

on line 1 (that is, the excess of the taxable stated interest

received or accrued during the tax year over the amortized

bond premium for the tax year). Don’t report on line 1 any

tax-exempt interest (including tax-exempt OID). Don’t

offset interest expense against interest income.

Period Covered

Enter the tax year in the space provided at the top of the

form. For a calendar year, enter the last two digits of the

calendar year in the first entry space. For a fiscal or short

tax year return, fill in the tax year space at the top of the

form.

Name and Address

Enter the fund’s true name (as set forth in the charter or

other legal document creating it), address, and EIN on the

appropriate lines. Enter the address of the fund’s principal

office or place of business. Include the suite, room, or

other unit number on the “Room or suite no.” line. If the

Instructions for Form 1120-SF (Rev. 12-2025)

Note: Amounts transferred to the fund by or on behalf of a

transferor are generally excluded from income.

Note: Report tax-exempt interest (including tax-exempt

OID) on line 2 of Additional Information (on page 2 of Form

1120-SF). However, if the fund acquired a tax-exempt

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bond at a premium, only report the net amount of

tax-exempt stated interest on line 2 of Additional

Information (that is, the excess of the tax-exempt stated

interest received or accrued during the tax year over the

amortized bond premium for the tax year, which is

required under section 171).

Line 3. Capital gain net income. Every sale or

exchange of a capital asset must be reported in detail on

Schedule D (Form 1120), Capital Gains and Losses (and

Form 8949, Sales and Other Dispositions of Capital

Assets, if applicable), even if there is no gain or loss. See

the Instructions for Schedule D (Form 1120).

Line 5. Other income. Enter any other taxable income

not reported on lines 1 through 4. List the type and

amount of income on an attached schedule. If the fund

has only one item of other income, describe it in

parentheses on the dotted line next to the entry space for

line 5.

Deductions

Don’t deduct:

• Expenses allocable to tax-exempt income (see section

265);

• Payments of claims made by the fund; and

• Expenses incurred by, or on behalf of, claimants or

transferors.

Line 11. Other deductions. Enter the total of other

deductions not entered on lines 7 through 10. List the type

and amount of deduction on an attached schedule. If the

fund has only one item of other deduction, describe it in

parentheses on the dotted line next to the entry space for

line 11.

Line 12. Net operating loss (NOL) deduction . Enter

the total NOL carryovers from prior tax years, but don’t

enter more than the fund’s taxable income. See

Regulations section 1.468B-2(b)(4) for details.

Part II. Tax Computation

Line 14. Modified gross income. Modified gross

income of a designated or qualified settlement fund is its

gross income, as defined in section 61, computed with

certain modifications. See Regulations section

1.468B-2(b) for more information.

Line 16. Credits and payments. Generally, no credits or

payments are allowed other than those on lines 16a

through 16e.

Line 17. Estimated tax penalty. A fund that doesn’t

make estimated tax payments when due may be subject

to an underpayment penalty for the period of

underpayment. Generally, a fund is subject to the penalty

if its tax liability is $500 or more and it didn’t timely pay the

lesser of:

• Its tax liability for the current year, or

• Its prior year’s tax.

See section 6655 for details and exceptions, including

special rules for large funds.

Use Form 2220, Underpayment of Estimated Tax by

Corporations, to see if the fund owes a penalty and to

figure the amount of the penalty. Generally, the fund

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doesn’t have to file this form because the IRS can figure

the amount of any penalty and bill the fund for it. See Form

2220 for other information that may apply.

If Form 2220 is attached, check the box on line 17 and

enter the amount of any penalty on that line.

Line 18. Tax due. Generally, the fund must pay any tax

due in full no later than the due date for filing its tax return

(excluding extensions). Payment of the tax due must be

made electronically. See Electronic Deposit Requirement,

earlier, for the payment options for the fund. Also, go to

IRS.gov/Payments for more detailed information.

If the fund cannot pay the full amount of tax owed, it can

apply for an installment agreement online. The fund can

apply for an installment agreement online if:

• It cannot pay the full amount shown on line 18,

• The total amount owed is $25,000 or less, and

• The fund can pay the liability in full in 24 months.

To apply using the Online Payment Agreement

Application, go to IRS.gov/OPA.

Under an installment agreement, the fund can pay what

it owes in monthly installments. There are certain

conditions that must be met to enter into and maintain an

installment agreement, such as paying the liability within

24 months and making all required deposits and timely

filing tax returns during the length of the agreement.

If the installment agreement is accepted, the fund will

be charged a fee and it will be subject to penalties and

interest on the amount of tax not paid by the due date of

the return.

Line 19. Overpayment. If there is an overpayment on

line 19, enter the amount the fund wants refunded on

line 20b. See the instructions for line 20b, later. The fund

can also choose to have all or part of the overpayment

credited to next year’s estimated tax by completing

line 20a. See the instructions for line 20a next.

Line 20a. Credited to next year’s estimated tax. The

fund can elect to apply all or part of the fund’s

overpayment to next year’s estimated tax. Enter the

amount from line 19 that the fund wants applied to next

year’s estimated tax.

Line 20b. Refunded. Enter the amount to be refunded

to the fund on line 20b. If the fund has access to U.S.

banking services, it should use direct deposit for any

refunds, whenever possible.

The benefits of a direct deposit include a faster refund,

the added security of a paperless payment, and the

savings of tax dollars associated with the reduced

processing costs.

Direct deposit of refund. If the fund wants its refund

directly deposited into its checking or savings account at

any U.S. bank or other financial institution, complete lines

20c through 20e. See the instructions for lines 20c, 20d,

and 20e, later.

The fund isn’t eligible to request a direct deposit if:

• The receiving financial institution is a foreign bank or a

foreign branch of a U.S. bank, or

• The fund has applied for an EIN but is filing its tax return

before receiving one.

Instructions for Form 1120-SF (Rev. 12-2025)

Line 20c. Routing number. The routing number must be

nine digits. The first two digits must be 01 through 12 or 21

through 32. Enter the financial institution’s routing number

and verify that the institution will accept a direct deposit.

Ask the fund’s financial institution for the correct routing

number to enter on line 20c if:

• The routing number on a deposit slip is different from

the routing number on the fund’s checks,

• The deposit is to a savings account that doesn’t allow

the fund to write checks, or

• The fund’s checks state they are payable through a

financial institution different from the one at which the

account is located.

Line 20d. Type of account. Check the appropriate box

for the type of account. Don’t check more than one box.

The fund must check the correct box to ensure the deposit

is accepted.

Line 20e. Account number. The account number can

be up to 17 characters (both numbers and letters). Include

hyphens but omit spaces and special symbols. Enter the

number from left to right and leave any unused boxes

blank. Don’t include the check number.

If the direct deposit to the fund’s account is different

from the amount it expected, the fund will receive an

explanation in the mail about 2 weeks after the refund is

deposited.

Conditions resulting in a refund by check. If the IRS is

unable to process the request for a direct deposit, a refund

by check will be generated instead. Reasons for not

processing a request include the following.

• The name of the fund on the tax return doesn’t match

the name on the account.

• The financial institution rejects the direct deposit

because of an incorrect routing or account number.

• The fund fails to indicate the type of account the deposit

is to be made to (that is, checking or savings).

Instructions for Form 1120-SF (Rev. 12-2025)

Note: The IRS isn’t responsible for a lost refund if the

fund enters the wrong account information. Check with the

fund’s financial institution to get the correct routing and

account numbers and to make sure the direct deposit will

be accepted.

Paperwork Reduction Act Notice. We ask for the

information on this form to carry out the Internal Revenue

laws of the United States. You are required to give us the

information. We need it to ensure that you are complying

with these laws and to allow us to figure and collect the

right amount of tax.

You aren’t required to provide the information requested

on a form that is subject to the Paperwork Reduction Act

unless the form displays a valid OMB control number.

Books or records relating to a form or its instructions must

be retained as long as their contents may become

material in the administration of any Internal Revenue law.

Generally, tax returns and return information are

confidential, as required by section 6103.

The time needed to complete and file this form will vary

depending on individual circumstances. The estimated

burden for business taxpayers filing this form is approved

under OMB control number 1545-0123 and is included in

the estimates shown in the instructions for their business

income tax return.

If you have comments concerning the accuracy of

these time estimates or suggestions for making this form

simpler, we would be happy to hear from you. You can

send us comments through IRS.gov/FormComments. Or

you can write to the Internal Revenue Service, Tax Forms

and Publications, 1111 Constitution Ave. NW, IR-6526,

Washington, DC 20224.

Don’t send Form 1120-SF to this office. Instead, see

Where To File, earlier.

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