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Last Tax Break Standing - 5/20/2009

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2009 News and Press Releases

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News	News 2009
HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

Last Tax Break Standing, With Other Breaks Coming Under Pressure, Companies Are Showing Renewed Interest In A Lucrative But Little-Used Tax Structure That Involves Setting Up A Shell Company To Which It Can Funnel Export Revenues
Alix Stuart

CFO.com. May 20, 2009
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EXCERPT: President Obama's proposed limit on the tax benefits associated with income generated overseas is likely bad news for most multinational businesses. But there may be some consolation for companies selling U.S-made goods overseas. Experts say they're seeing renewed interest in a lucrative but little-used export tax break known as the IC-DISC (interest charge - domestic international sales corporation). Although the provision fluctuates in popularity depending on the presence of other tax incentives, it's been part of the tax code for 37 years. The structure, which experts say can pay for itself in months, is a way for closely-held companies to cut taxes and for many others to defer taxes on a cash stash. "It's the only export tax incentive we still have," says Jonathan Lysenko, international tax director for Amper, Politziner & Mattia, an accounting firm. "What's really disappointing is that so few exporters take advantage of it." To be sure, there are reasons for caution. Staying within the legal requirements of an IC-DISC requires good controls, and the ephemeral nature of tax legislation may affect the benefits. Finance executives considering establishing IC-DISCs "should carefully monitor the potential for future legislative changes," says Marc J. Gerson, a tax policy specialist with Miller & Chevalier, a Washington, D.C. law firm, noting that in the past Congress has considered legislation that would change the vehicles' tax treatment. Assuming they don't get the ax this session, though, they may provide some welcome tax relief. For companies that are eligible, an IC-DISC "is a no-brainer in terms of the benefits outweighing costs," says Larry Harding, CEO of High Street Partners, a consulting firm that helps companies expand internationally.

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