Strategizing International Tax Best Practices – by Keith Brockman

Posts tagged ‘Section 965’

US Repatriation Tax; IRS clarity(?)

IRS recently updated its previously published Q and A’s re: application of Sec. 965 deemed repatriation tax instructions re: estimated tax payments for 2018.  The prior version still has a debatable Question 14 that applied a 2017 overpayment to the entire amount of deemed repatriation tax (not just the first installment) prior to application for the first estimated payment of federal income tax generally due April 15th.

As Question 14 was issued literally just prior to the first installment date, corporations may have missed this point and thereby would be subject to interest and penalty for late payment.

The latest update obviates such penalties if the second estimated payment is a cumulative catch-up amount for both the first and second estimates.  

However, what was not fixed is the apparent ability by IRS to apply the overpayment solely to deemed repatriation tax in its entirety prior to applying it to estimated federal income tax liability due.  This is still a question in the minds of many.  

EY’s Global Tax Alert highlights this development.

https://www.ey.com/Publication/vwLUAssets/US_IRS_updates_Section_965_transition_tax_FAQs_to_include_late-payment_penalty_and_filing_relief_-_action_may_be_needed_by_15_June_2018/$FILE/2018G_03498-181Gbl_US%20IRS%20updates%20Section%20965%20transition%20tax%20FAQs.pdf

TEI”s comments: accounting for BEAT/GILTI/FDII

The Tax Executives Institute, Inc. (TEI) previously issued excellent comments regarding divergent views of the Big 4 accounting firms for US GAAP tax accounting issues for the new US Tax Act aspects.

These views are still divergent today as we approach the end of March, and further issues continue to develop that impact the cash tax and tax reporting aspects for the US Tax Act.  Accordingly, the same facts may provide a different repatriation tax liability and tax accounting for different multinational companies, certainly a difficult variable for comparison by tax experts and, most importantly, by investors.

As these positions may continue to diverge, position papers and discussions with the audit firm, Audit Committee of the Board of Directors and the company should be scheduled to ensure there are no surprises as earning release dates are emerging.  

https://www.tei.org/sites/default/files/advocacy_pdfs/TEI%20Letter%20re%20ASC%20740%20treatment%20of%20BEAT%20and%20GILTI.pdf

%d bloggers like this: