IC-DISC Export Tax Incentive
A Significant Reduction in Tax Liability for Many U.S. Taxpayers
A frequently overlooked U.S. tax provision known as the “IC-DISC” offers substantial permanent U.S. tax savings for U.S. taxpayers in the “supply chain” for U.S. exported products. The IC-DISC tax savings are achieved from a reduced 23.8% (or lower) U.S. tax rate on at least half of the income derived from U.S. exported products, in lieu of the normal Federal tax rate of up to 40%.
Those eligible for the IC-DISC tax benefit include U.S. taxpayers engaged in any one of the following supply chain activities for U.S. exported products or their components: manufacturers, growers, farmers, processors, wholesalers, distributors, retailers, and others. Any U.S. taxpayer engaged in any one of these supply chain activities can qualify for IC-DISC benefits, whether or not they are the actual exporter of the U.S. products.
The IC-DISC benefit is also available to U.S. engineering and architectural firms that perform work related to foreign projects, even when some or all of the work is performed outside of the U.S. In many cases, construction or development oversight and other related activities performed abroad by U.S. engineering and architectural firms may also qualify for IC-DISC benefits.
BPM has the Leading IC-DISC Practice in the U.S.
Our IC-DISC practice is nationally-recognized and the largest in the U.S. BPM has over 500 IC-DISC clients across the U.S. representing all major industries, including many well-known and top-tier exporting companies. We can help you take advantage of this powerful U.S. tax incentive by quickly and reliably determining the viability and estimated benefits of the IC-DISC in your specific circumstances.
We provide comprehensive IC-DISC services, including:
- IC-DISC incorporation and all requisite organizational formalities, such as EIN, IC-DISC election, state government filings, and set-up of general ledger and chart of accounts;
- Establishment of “shared IC-DISC” arrangements for use by multiple taxpayers, including both related and unrelated parties;
- Turn-key implementation of relevant IC-DISC substantive provisions, such as export AR factoring, producer loans, and ancillary services;
- On-going management of annual IC-DISC formalities, including state filings, qualified assets and income compliance, general accounting services, and year-end financial statements; and
- Annual IC-DISC tax compliance, including comprehensive IC-DISC commission and factoring calculations, and completion of IRS Form 1120-IC-DISC and supporting schedules.
BPM’S Proprietary “IC-DISC Benefits Maximization@” Software
To ensure that our clients obtain the full IC-DISC benefits to which they are entitled, we use our proprietary “IC-DISC Benefits Maximization@” software to determine the maximum allowable IC-DISC benefits. Our IC-DISC software is comprehensive, allowing us to perform even the most complex multi-tiered calculations taking into account all relevant IC-DISC alternatives for product grouping, transaction-by-transaction analysis, income and gross receipts pricing methods, expense apportionment, export AR factoring, producer loans, ancillary services, foreign personal holding company exposures, benefits limitations, and deferral versus current payment of IC-DISC dividends.
In addition to determining maximum allowable IC-DISC benefits, our proprietary IC-DISC Benefits Maximization@ software supports our seamless and reliable preparation of required annual IC-DISC financial statements, including determination of relevant journal entries for the IC-DISC and related parties. Additionally, to help ensure that our clients have the most reliable tax returns and documentation needed to fully support the maximum allowable IC-DISC benefit claimed, our software also prepares annual 1120-IC-DISC tax returns and all supporting schedules.
Support for IC-DISC Needs of Other CPA Firms
We frequently work collaboratively with clients otherwise serviced by other CPA firms, so welcome opportunities to support other CPA firms that don’t have the requisite IC-DISC expertise. In working with clients of other CPA firms, we always observe a strict “fire-wall” between the IC-DISC services we provide such clients and the core relationships they have with their existing CPA firms. Simply stated, BPM will never compete to provide other non-IC-DISC services to clients of other CPA firms that rely upon us to meet their IC-DISC needs.
- Global Tax Strategy Consulting
- Global Business Model Optimization
- International Expansion: Mid-Market and Early-Stage
- IC-DISC Export Tax Incentive
- U.S. Inbound International Tax
- Intellectual Property Tax Planning
- Transfer Pricing
- International Tax Quantitative Services
- International Mergers and Acquisitions
- International Tax Compliance and Provision
- Indirect Tax (VAT or GST)
- International Assignment Tax
- Mexico & Latin America Tax Services
- Multinational Families
- IRS Voluntary Disclosure Program
- China Tax Services