IRS Form 8985-V Guide: Pass-Through Tax Payment Voucher

Introduction – What Is Form 8985-V?

IRS Form 8985-V, titled Tax Payment by a Pass-Through Partner, is a specialized federal tax payment voucher administered by the Internal Revenue Service (IRS) and the U.S. Department of the Treasury. It operates under the centralized partnership audit regime established by the Bipartisan Budget Act of 2015 (BBA), codified under Internal Revenue Code (IRC) Sections 6226 and 6227.

This voucher is used exclusively by intermediate “pass-through partners”—such as upper-tier partnerships, S corporations, and trusts—that choose to pay an audit tax liability at the entity level rather than pushing it out to their owners. Form 8985-V accompanies a physical check or money order, ensuring the payment is correctly credited to the specific BBA audit case.

Purpose of the Form – Why Does Form 8985-V Exist?

When an IRS audit of a lower-tier partnership concludes and the partnership elects to “push out” adjustments using Form 8986, an upper-tier pass-through partner faces two choices under Section 6226(b)(4): it can push the adjustments out further to its own partners, or it can pay the tax (the imputed underpayment) directly at the entity level.

Because the IRS processes thousands of checks daily, sending an unattached payment risks having the money misapplied to standard employment taxes, regular annual income taxes, or lost in general processing. Form 8985-V solves this tracking problem. It acts as an official payment routing slip that ties the check directly to the unique BBA audit tracking number, the audited tax year, and the master Form 8985 transmittal report.

Who Needs to File This Form?

You must complete and submit Form 8985-V if your business entity meets all of the following conditions:

• Pass-Through Partner Status: Your organization is an entity required to pass income through to its owners, such as a partnership, S corporation, estate, or trust.
• Received Form 8986: You received a Form 8986 reflecting audit adjustments from a lower-tier BBA partnership or an Administrative Adjustment Request (AAR).
• Elected Entity-Level Payment: You elected under Section 6226(b)(4)(A)(ii) or Section 6227 to pay the imputed underpayment, interest, and penalties at the pass-through entity level rather than issuing new Forms 8986 to your owners.
• Paying by Check or Money Order: You choose to pay your tax liability by physical paper check or money order rather than making an electronic payment.

Who Is Exempt / Not Required to File?

Many partners and entities involved in BBA audits will never use Form 8985-V. You are exempt or not required to use this voucher if:

• Paying Electronically: You make your tax payment electronically using the Electronic Federal Tax Payment System (EFTPS) or direct bank transfer. Electronic payments do not use paper vouchers.
• Pushing Out Adjustments: Your pass-through entity chooses to push the adjustments further out to its own partners or shareholders by issuing Forms 8986. Because no tax is paid at the entity level, no voucher is needed.
• Individual Partners: Ultimate individual taxpayers, C corporations, and taxable estates that receive Form 8986 report their tax on Form 8978 and pay with their regular personal or corporate tax return.
• Original Audited Partnerships: The primary partnership that was originally audited uses different payment mechanisms and does not use Form 8985-V.

When to File Form 8985-V

Form 8985-V is an event-driven payment voucher submitted alongside your master Form 8985 filing. It must be postmarked on or before the legal deadline for the pass-through partner to pay its tax liability.

Under Treasury Regulation Section 301.6226-3(e), payment is generally due on or before the extended due date of the pass-through partner’s return for the “adjustment year” (the tax year in which the Form 8986 was received). Remitting payment after this date will trigger additional failure-to-pay penalties and compounding statutory interest under Section 6621.

Where and How to File

Form 8985-V must be mailed along with your completed Form 8985 and your physical payment. It cannot be transmitted online as a digital attachment.

Mail the package to the designated IRS address as per instructions for BBA payments and transmittals. Follow these critical packaging guidelines:

• Do not staple, tape, or paperclip Form 8985-V to your check or to Form 8985. Enclose it loosely in the envelope.
• Make your check or money order payable to the “United States Treasury”.
• Write the pass-through partner’s EIN, the audited tax year, and “Form 8985-V” clearly on the memo line of the check.

Step-by-Step Instructions to Fill Form 8985-V

Form 8985-V is a concise, single-page voucher designed to be read by automated optical check-processing scanners.

Entity Information Fields

Enter the legal name of the pass-through partner, Employer Identification Number (EIN), and complete business mailing address exactly as reported on your master Form 8985.

Line-by-Line Breakdown

Field / Line	Form Focus	Filing Directions
Tax Year Ending	Audited Tax Year	Enter the tax year ending date (MM/DD/YYYY) of the pass-through partner to which the adjustments relate (the “reviewed year”).
Incoming Tracking Number	Audit Linkage	Enter the exact unique Incoming Tracking Number found on the Form 8986 received by the pass-through partner.
Audit Control Number	Examination Identifier	Enter the 10-digit Audit Control Number from the original examination correspondence, if applicable.
Amount of Payment	Total Remittance	Enter the exact total dollar amount of the check or money order, which must equal the combined total of tax, penalties, and interest calculated in Part III of Form 8985.

Required Documents and Information Needed Before Filling

Before filling out Form 8985-V and writing your check, compile the following records:

• Received Form 8986: The partner statement displaying the Incoming Tracking Number and your allocated audit adjustments.
• Completed Form 8985: The master transmittal report, specifically Part III where the entity-level payment election is made and Part V where the tax liability is computed.
• Audit Control Records: The Notice of Final Partnership Adjustment (FPA) or Form 14792 showing the 10-digit Audit Control Number.
• U.S. Bank Check: A check or money order drawn on a U.S. financial institution in U.S. dollars.

Common Mistakes to Avoid

Errors on payment vouchers can cause payments to sit uncredited in IRS holding accounts. Watch out for these frequent mistakes:

• Stapling the Check: Stapling or paperclipping the check to Form 8985-V damages the voucher during high-speed mail scanning and delays processing.
• Mismatched Tracking Numbers: Mistyping the Incoming Tracking Number. This number is the only bridge connecting your check to the specific audit file.
• Omitting Form 8985: Mailing Form 8985-V and a check by themselves without the master Form 8985 report. The voucher must accompany Form 8985.
• Submitting When Paying Online: Sending a paper Form 8985-V after paying through EFTPS. This can cause duplicate billing or confusion in IRS records.
• Forgetting Memo Line Details: Failing to write your EIN, the tax year, and “Form 8985-V” on the face of the check.

Penalties for Non-Filing or Errors

Because Form 8985-V accompanies a tax payment, mistakes or failure to submit it properly carry significant financial consequences:

• Misallocated Payments: If your check lacks a voucher or clear tracking numbers, the IRS may treat the payment as unallocated, triggering automated collection notices for unpaid BBA audit taxes.
• Failure-to-Pay Penalties: Late or miscredited payments trigger statutory penalties under Section 6651 (0.5 percent per month, up to 25 percent of the unpaid tax).
• Higher Section 6621 Interest: BBA audit adjustments are subject to an elevated statutory interest rate running from the original due date of the reviewed year return until fully paid.
• Invalid Push-Out Election: Failing to pay the required liability on time can invalidate your pass-through entity payment election, creating legal disputes between the entity and its owners.

Related Forms and Schedules

Form 8985-V functions as part of a specialized BBA audit payment network:

• Form 8985: Pass-Through — Statement Transmittal/Partnership Adjustment Tracking Report (the master form that Form 8985-V accompanies).
• Form 8986: Partner’s Share of Adjustment(s) to Partnership-Related Item(s) (the source document providing the tracking number).
• Form 8978: Partner’s Additional Reporting Year Tax (used by individual partners, who do not use Form 8985-V).
• Form 1065 / Form 1120-S / Form 1041: Primary annual returns for pass-through entities.

Frequently Asked Questions

Do I need to send Form 8985-V if I pay electronically?

No. Form 8985-V is used strictly when remitting payment by physical paper check or money order. If you pay via EFTPS or electronic wire, do not mail Form 8985-V.

Can an individual partner use Form 8985-V to pay their audit tax?

No. Individual partners calculate their tax on Form 8978 and pay using standard individual payment methods (such as Form 1040-V or IRS Direct Pay). Form 8985-V is exclusively for pass-through entities.

Where can I find the Incoming Tracking Number?

The Incoming Tracking Number is located at the top of the Form 8986 that your pass-through entity received from the lower-tier partnership.

Can an S corporation use Form 8985-V?

Yes. If an S corporation owns an interest in an audited BBA partnership and elects to pay the tax liability at the S corporation level rather than passing it to its shareholders, it uses Form 8985-V to accompany its check.

What happens if I send the check without Form 8985-V?

Without the voucher, IRS processing machines cannot identify that the payment belongs to a BBA audit push-out. The check may be credited to general income tax accounts or returned, leading to late-payment penalties.

Should I mail Form 8985-V separately from Form 8985?

No. Form 8985-V, your payment, and your completed Form 8985 should all be placed loosely inside the same mailing envelope and sent together.

Conclusion – Key Takeaways Summarized

IRS Form 8985-V is the vital payment routing document that ensures paper tax payments made by upper-tier pass-through partners are accurately credited to their BBA audit files. It connects your physical check to your Incoming Tracking Number and master Form 8985 report.

To avoid tax mismatches and costly penalties, double-check your Incoming Tracking Number, verify that your payment includes statutory interest and penalties, enclose the voucher loosely with your check, and mail it alongside Form 8985 to the designated IRS address before your filing deadline.