Language in the Tax Cuts and Job Acts enacted in December, 2017, established the requirement for shareholders to pay a “transition” tax on the repatriated, previously untaxed, earnings of identified foreign corporations. Now known as the “section 965 transition tax,” the IRS is offering some relief for those with certain circumstances who missed the April 18, 2018 payment deadline.
Understanding section 965 transition taxes
Section 965 transition taxes are a responsibility of a “US shareholder of a deferred foreign income corporation” and those who are a “direct or indirect partner in a domestic partnership, shareholder in an S corporation, or beneficiary of another passthrough entity that is a US shareholder of a deferred foreign income corporation.”
In accordance with the new tax, filers must submit a completed IRC 965 Transition Tax Statement, which collects information that includes:
The elections available and payments required under section 965 are aligned with the usual April tax date. In its new guidance, the IRS is making some exceptions for those who have filed late or improperly this year. Exceptions include:
Offshore tax issues and payments can be complicated—and expensive if you become the target of an IRS audit. If you have questions about section 965 transition tax payments, FBAR, or FATCA reporting, speak with a knowledgeable tax lawyer.
Skilled tax defense if you face an IRS criminal tax investigation or civil tax audit
The tax attorneys at Robert J. Fedor, Esq., LLC deliver experienced legal representation if you are involved in a tax controversy or questioned about your foreign holdings. With offices in Chicago and Cleveland, we serve local and international clients. Call 800-579-0997 or contact us today.