IRS offers penalty, filing relief to many subject to new transition tax on foreign earnings

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IRS offers penalty, filing relief to many subject to new transition tax on foreign earnings

IR-2018-131, June 4, 2018

WASHINGTON — The Internal Revenue Service (IRS) today announced that it will waive certain late-payment penalties relating to the section 965 transition tax, and provided additional information for individuals subject to the section 965 transition tax regarding the due date for relevant elections.

IR-2018-131, June 4, 2018

WASHINGTON — The Internal Revenue Service (IRS) today announced that it will waive certain late-payment penalties relating to the section 965 transition tax, and provided additional information for individuals subject to the section 965 transition tax regarding the due date for relevant elections.

The IRS explained the relief in three new FAQs, posted today on the agency’s tax reform page. These supplement 14 existing questions and answers that provide detailed guidance to taxpayers on reporting and paying the tax.

The IRS explained the relief in three new FAQs, posted today on the agency’s tax reform page. These supplement 14 existing questions and answers that provide detailed guidance to taxpayers on reporting and paying the tax.

Section 965 of the Internal Revenue Code, enacted in December 2017, imposes a transition tax on untaxed foreign earnings of foreign corporations owned by U.S. shareholders by deeming those earnings to be repatriated. Foreign earnings held in the form of cash and cash equivalents are taxed at a 15.5 percent rate, and the remaining earnings are taxed at an 8 percent rate. The transition tax generally may be paid in installments over an eight-year period when a taxpayer files a timely election under section 965(h).

Section 965 of the Internal Revenue Code, enacted in December 2017, imposes a transition tax on untaxed foreign earnings of foreign corporations owned by U.S. shareholders by deeming those earnings to be repatriated. Foreign earnings held in the form of cash and cash equivalents are taxed at a 15.5 percent rate, and the remaining earnings are taxed at an 8 percent rate. The transition tax generally may be paid in installments over an eight-year period when a taxpayer files a timely election under section 965(h).

In general, the questions and answers indicate that:

In general, the questions and answers indicate that:

See the FAQs for details. For more information about the transition tax and other tax reform provisions, visit IRS.gov/taxreform.

See the FAQs for details. For more information about the transition tax and other tax reform provisions, visit IRS.gov/taxreform.

For Treasury media inquiries on this matter please contact Press@treasury.gov or 202-622-2960.

For Treasury media inquiries on this matter please contact Press@treasury.gov or 202-622-2960.

Research & References of IRS offers penalty, filing relief to many subject to new transition tax on foreign earnings|A&C Accounting And Tax Services
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