Enacted by Congress in 1984, IC-DISC (Interest Charge-
Domestic International Sales Corporation) provides permanent
annual tax savings and other benefits for exporters of goods
manufactured in the United States.
IC-DISC benefits include:
- Recurring permanent tax savings for shareholders
- Typically high benefits relative to costs
- Deferral mechanism when earnings are not distributed out of IC-DISC
- The ability to tax efficiently, which helps manage cash flow
- Potential retirement planning flexibility
- Analysis of allocation and apportionment methodologies
- Multi-dimensional profitability analysis, useful in business review
- Transactional taxable income calculation, reconciling tax-return data to financial information
- Transparent paper trail
With an engagement team that works on- or off-site, WTP’s efficient implementation of IC-DISC does not impact customers or operations. Our approach relies on data that is easily accessible, bringing accurate, timely results for inclusion in a tax return.
The implementation of IC-DISC requires the following steps:
- Exporting company shareholders create new entity, which elects IC-DISC treatment
- Exporting company and IC-DISC entity execute a commission agreement
- Exporting company pays IC-DISC a commission on export sales
- Exporting company deducts the commission
- Commission income of IC-DISC is not taxed
- IC-DISC can pay a dividend in current or future tax year
- IC-DISC dividend is typically a qualified dividend, taxed at 20 percent
Contact us to learn more about these services.