Claim every dollar you are entitled to by law.
Your competitors at home and abroad certainly will.
Are exports part of your business?
If so, hopefully you have already taken advantage of the
Interest Charge - Domestic International Sales Corporation (IC-DISC).
This incentive is available to almost any business that exports products, software, or provides certain services overseas.
The IC-DISC is a government program that allows
up to 50% of qualifying foreign sales income or 4% of total qualifying foreign sales
to be taxed at the qualified dividend rate of 23.8%.
IC-DISC rules and regulations are considered by some tax experts to be some of the most dense and difficult to digest, follow, and keep compliant.
Failure to comply with the requirements can, unfortunately, result in disqualification of the company’s IC-DISC status – the rules can be strict.
Your Business WITHOUT IC-DISC
Your Business WITH IC-DISC
Requirements of IC-DISC:
Exporting Entity must have taxable income
Formation of a separate corporation that acts as a commission agent (or buy/sell entity in rarer instances)
Election of IC-DISC status within the designated time requirements
Must ship qualified export property outside the U.S for more than one year
Export property’s fair market value must not be more than 50% attributable to articles imported into the U.S.
Annual tax return filing on the 15th day of the 9th month following the end of the IC-DISC’s taxable year
Maintenance of separate set of books and records
Disclosure of international boycott operations
Distribution of IC-DISC Incentive
IC-DISC is paid a commission by a related entity which is calculated based on the related supplier's qualifying foreign sales or foreign taxable income for the year
Less common buy-sell arrangement where income is calculated based on the IC-DISC itself
Ways to Apply the IC-DISC Incentive
Distribute commission to shareholders
Retain funds (with restrictions on its use)
Whether your company is just now investigating tax strategies for export sales and income or has long been taking advantage of the IC-DISC,
Tax Credit Collective can help your company understand,
meet the qualifications for and claim IC-DISC incentives
as well as assist with the ongoing governance and maintenance of
IC-DISC to sustain your tax benefits for the future.