IC-DISC tax structure
What is an IC-DISC?
IC-DISC is short for Interest Charge Domestic International Sales Corporation. It is a separate legal entity, recognized by the IRS, which is set up for the purpose of taking advantage of certain tax incentives for U.S.-based exporters. Originally enacted by Congress in 1971, it is the last surviving incentive for U.S. companies that have products or services delivered outside the United States.
YOU SHOULD CONSIDER SETTING UP AN IC-DISC IF:
IN ORDER TO QUALIFY FOR AN IC-DISC, THE U.S. EXPORTER MUST EXPORT ITEMS THAT:
The THREE STEPS TO EXPORT SALES TAX SAVINGS
First, the exporting company creates new legal entity and elects federal non-taxable IC-DISC status.
IRS approval is required, and setting up this structure requires a deep knowledge of this specific area of the tax code.
After the IC-DISC status is approved by the IRS, tax savings can be realized by paying a commission to IC-DISC. This commission can be deducted at 39.6%, which reduces the ordinary taxable income of the corporation.
The commissions paid to the IC-DISC are then distributed to the owners of the IC-DISC at qualified dividend rates (23.8%), resulting in a tax savings of 39.6%-23.8% or 15.8%.
REVEAL THE SAVINGS
Click on an IC-DISC commission amount to see the tax savings scenarios.
Keep in mind that calculating the amount of commission to pay on expert sales requires extensive experience in this area of tax law. See the possibilities, and then book a free consultation with Veracity’s IC-DISC tax expert.
Frequently Asked Questions about the IC-DISC structure
DOES MY TAX PREPARER ALREADY DO THIS?
IS the ic-disc structure a permanent tax benefit?
How much does it cost and how much will I save?
How do I get started?
Ready to start saving?
Setting up and maintaining an IC-DISC structure requires deep knowledge in this specific area of the tax code. Setting up the IC-DISC requires selecting the proper state to house the IC-DISC. Selecting the methodology of calculating the commission on export sales requires extensive experience in this area of the tax law. Finally, ongoing tax compliance is vital to retaining and defending the benefits derived by using the IC-DISC structure.
Veracity’s leaders and staff have the depth of knowledge and expertise required to perform the complex tasks associated with a proper establishment of an IC-DISC and the tax expertise to help you maximize the benefits.