IRS provides additional details on transition tax on untaxed foreign earnings

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IRS provides additional details on transition tax on untaxed foreign earnings

An official website of the United States Government

IR-2019-128, July 16, 2019

WASHINGTON — The Internal Revenue Service provided additional information to help taxpayers meet their filing and payment requirements for the Section 965 transition tax on untaxed foreign earnings.

The Tax Cuts and Jobs Act requires certain taxpayers that have untaxed foreign earnings and profits to pay a tax as if those earnings and profits have been repatriated to the‎ United States. The law provides details on the income that must be recognized. It also provides a related deduction which generally lowers the effective tax rate to between 8% and 15.5%. Certain taxpayers may elect to pay the transition tax over eight years.

The IRS released information in a question and answer format (Q&A) related to Section 965 that addresses certain general issues that are not specific to the filing of a 2017 or 2018 tax return. The issues addressed include how to make subsequent installment payments when the transition tax is paid over eight years. The Q&As also address the filing of Transfer Agreements and Consent Agreements. Additional information regarding Section 965 can be found at IRS.gov. 

The Treasury Department and the IRS released final regulations related to Section 965 in February and last month released final GILTI regulations which include revisions to the Section 965 final regulations.

An official website of the United States Government

IR-2019-128, July 16, 2019

WASHINGTON — The Internal Revenue Service provided additional information to help taxpayers meet their filing and payment requirements for the Section 965 transition tax on untaxed foreign earnings.

The Tax Cuts and Jobs Act requires certain taxpayers that have untaxed foreign earnings and profits to pay a tax as if those earnings and profits have been repatriated to the‎ United States. The law provides details on the income that must be recognized. It also provides a related deduction which generally lowers the effective tax rate to between 8% and 15.5%. Certain taxpayers may elect to pay the transition tax over eight years.

The IRS released information in a question and answer format (Q&A) related to Section 965 that addresses certain general issues that are not specific to the filing of a 2017 or 2018 tax return. The issues addressed include how to make subsequent installment payments when the transition tax is paid over eight years. The Q&As also address the filing of Transfer Agreements and Consent Agreements. Additional information regarding Section 965 can be found at IRS.gov. 

The Treasury Department and the IRS released final regulations related to Section 965 in February and last month released final GILTI regulations which include revisions to the Section 965 final regulations.

Research & References of IRS provides additional details on transition tax on untaxed foreign earnings|A&C Accounting And Tax Services
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IRS provides additional details on transition tax on untaxed foreign earnings

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