The IC-DISC ( Interest Charged -Domestic International Sales Corp.) is a strategy established by Congress to give domestic companies a competitive advantage in markets outside of the US.  This export incentive is backed by Congress and has bi-partisan support. The passage of the American Taxpayer Relief Act of 2012 provides permanence for the IC-DISC. As such, the IC-DISC provides a permanent federal income tax reduction to the shareholders of the IC-DISC. This tax savings is realized when the exporting company deducts the commission it pays to the IC-DISC from its ordinary income. This commission would typically be deductible at 39.6%. IC-DISC is a non-taxable entity, and a 23.8% percent tax is paid on qualified dividends to the shareholders of the IC-DISC. Thus, a reduction in federal income taxes from 39.6% to 23.8% on qualified export sales is realized. The IC-DISC provides a reduction to current federal tax liabilities, creating an annual source of cash. The incentive is not a credit or a deduction.  When the IC-DISC is established, which can be relatively inexpensive, your company will have the ability to transfer Line 1 "Income" on the K1 to line 5b "Dividend"

If your company is directly exporting products outside the US, is selling to Canada or Mexico or if you have distributors, salespeople or representatives selling outside the US you may be eligible.  In addition, if your goods are sold and are part of, or a component of, another product, and that product is being sold outside of the US, your goods will qualify as an indirect export and are eligible for the IC-DISC.

Research Tax Credits, LLC has a full team dedicated solely to the IC-DISC and International Tax.  A majority of privately held U.S. companies are missing a significant income tax incentive because it's believed they simply don't qualify. Let our team work with you to maximize the available tax savings through IC-DISC.

For additional information pertaining to the IC-DISK strategy please click here.