If you are in the business of accounting, tax and/or law you are likely experiencing an influx of clients who need help with IRC Section 965, Mandatory Repatriation Tax. The rules are very complex, the results can be quite punitive, and the direction we have received from the IRS to-date has been vague, at best.
This one-time repatriation tax impacts the filings for the 2017 tax year if foreign corporations (non-US corporations) held by US individual or corporate shareholders have a calendar year end. The tax due was April 17, 2018 for US residents and June 15, 2018 for US persons resident outside of the US.
Based on the Conference Committee Report and the three IRS communications released so far, the recommendation is to attach a statement to the 2017 tax return showing the 965 income, tax, election(s), schedule of taxes due per year, tax due this year, etc. It is further recommended that electronic filers wait until on or after 2 April 2018 to file to account for any further system changes from the IRS.
Failing to submit returns that use the new guidance may result in rejection or delays in processing tax returns or the issuance of erroneous notices.
As cross-border tax experts, Hanson Crossborder Tax Inc. is at the forefront of developing innovative tools to assist our clients with complex tax rules like this one, and we are ready to assist your clients as well.
In response to this new tax, we have developed Section 965 Repatriation Transition Tax Software for Foreign Corporations with Calendar Year-End. As part of our service, we will:
- Prepare the computation of Section 965 Repatriation Transition tax
- Generate Section 965 Repatriation Transition tax statement to be attached to the shareholder’s US tax return
- Determine the eligible portion of foreign tax credit to apply against Section 965 Repatriation Transition tax
- Provide IRS-prescribed election statements, where appropriate
Since we are not preparing the tax returns, but rather computing taxes based on client information, the service is offered starting at a flat fee of $2,000 CAD.