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US Transition Tax Guidance Available

by Mike Godfrey, Tax-News.com, Washington

12 October 2018


A public hearing is due to be held on the proposed section 965 transition tax regulations, according to a notice published in the Federal Register by the Internal Revenue Service and the Treasury Department on October 15.

According to the notice, the public hearing will be held at the IRS Building in Washington D.C. on October 22, 2018. The notice advised taxpayers that outlines of the topics to be discussed at the meeting must be received by the IRS by October 16.

Section 965 was added to the tax code by the Tax Cuts and Jobs Act of 2017. It is a tax on the untaxed foreign earnings of foreign subsidiaries of US companies.

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 eight percent rate. The tax generally may be paid in installments over an eight-year period.

Proposed transition tax regulations were published by the Treasury Department and the IRS on August 1, 2018. They include information for making the elections available to taxpayers under Section 965, as well as detailed information on the calculation and reporting of a US shareholder's Section 965(a) inclusion amount.

Additional transition tax guidance was included in Notice 2018-78, which was made available on the IRS website on October 1, 2018, and published in the Internal Revenue Bulletin on October 15, 2018.

Among other things, Notice 2018-78 relaxes the deadline for certain taxpayers required to make a binding basis election under Section 965.

TAGS: compliance | tax | tax compliance | accounting | transfer pricing | United States | regulation | Tax | BEPS

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