In recent years, the Interest Charge – Domestic International Sales Corporation has become a viable planning opportunity to reduce Federal income tax liabilities for those that:

  • Export goods manufactured in the United States
  • Provide engineering services for construction projects outside of the United States or offshore
  • Provide architectural services for construction projects outside of the United States
  • Lease or rent property used by the lessee outside of the United States

Proper planning is required to ensure the IC-DISC has been established correctly and to ensure the tax benefits are maximized each year.

How It Works

  • The operating company or its shareholders form a separate, tax-exempt IC-DISC that is formed in accordance with the Internal Revenue Code
  • The operating company pays a commission to the IC-DISC
  • The operating company expenses the commission paid to the IC-DISC, reducing its ordinary income
  • By statute, the IC-DISC is tax-exempt and pays no Federal income tax on its commission income
  • The IC-DISC pays a qualified dividend to the owner(s) of the IC-DISC, which is taxed at a reduced rate (currently 0% - 23.8%, depending upon the income level of the shareholder)

While this process may sound simple, taxpayers need experienced CPAs and tax professionals with experience assisting you in setting up and maximizing your IC-DISC benefit.

Contact Us Today
For more details about these services and how we can add value to your organization, contact one of the following professionals at our firm:

Doug Mueller, CPA | 314.862.2070 | dmueller@muellerprost.com
Mike Devereux II, CPA | 314.862.2070 | mdevereux@muellerprost.com

For assistance with
Manufacturing & Distribution Industries:

Call Us: 314.862.2070

 

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