What is IC-DISC?
IC-DISC is the acronym for interest charge domestic international sales corporation. Under the current Internal Revenue Code, eligible companies must setup a IC-DISC with a separate bank account and accounting books to receive an export tax incentive. The IC-DISC must also file an annual U.S. income tax return – although no income tax is paid upon it.
An IC-DISC allows exporters to pay a commission, which can then be repatriated to shareholders as DISC dividends. These dividends are only subject to a maximum 15 percent tax bracket, which is significantly lower than the higher 35 percent tax bracket the same company without an IC-DISC would have to pay. With the savings DISC tax breaks provide, U.S. companies are encouraged to export more goods and certain services around the world.
Who is eligible?
There are three basic types of companies that should consider forming an IC-DISC: direct exporters, architectural and engineering design companies, and indirect exporters. Direct exporters ship their products directly through exporting. Architectural companies are eligible if the structure being built or proposed to be built is in another country. Indirect exporters manufacture parts that are components for exported goods or resell good for export that were manufactured by another part. Many of these companies do not know they are eligible. Contact PIASCIK today so we can show you how IC-DISC incentives can save you and your shareholders from paying unnecessary taxes.
Importance of filing
Under past tax guidelines, such as the Extraterritorial Income Exclusion (EIE), the Internal Revenue Code allowed company filings to be retroactively applied. With the onset of World Trade Organization sanctions against U.S. exporters, these policies were repealed by Congress, and now the IC-DISC is the only venue left for U.S. companies to receive exporter tax incentives. Companies can no longer file for these incentives retroactively, so a company can actually lose money over time without IC-DISC filing. Here are a few additional IC-DISC tax benefits:
- Deferral of IC-DISC income if chosen
- Increase of cash flow for exporter
- Lower tax rate
- Smaller tax base for exporter
- Eliminates double taxation on C companies
- Economical working capital export growth
PIASCIK can use DISC tax benefits in conjunction with intracompany transaction rules to maximize your company’s potential IC-DISC incentives effectively and efficiently.
Recognized expertise in IC-DISC matters
PIASCIK is a recognized leader in IC-DISC with over 75 years of combined international tax experience. Our highly trained and educated international tax professionals provide a 24/7 world-class service as an economical alternative to expensive national sized accounting firms. Our members include the President of the Virginia International Business Council and Treasure for the Society of International Business Fellow. PIASCIK has been a proud program partner for all of Virginia's incoming and outgoing international programs. Additionally, our international tax professional have helped over 35 clients successfully navigate OVDI programs while providing representation in over 49 countries.
PIASCIK international tax professionals offer flat fees without any hidden surcharges. PIASCIK even provides the initial consultation FREE. Contact PIASCIK today and see how we can help navigate your company through the IC-DISC rules..
