IC-DISC Export Tax Incentive Services

Tax Point Advisors National Expertise and Local Touch help you benefit from the IC-DISC, a tax incentive for exporting goods made in the U.S.

Overview

The Interest Charge Domestic International Sales Corporation, or IC-DISC, can be used as a tax benefit for qualifying exporters of goods produced in the U.S. The IC-DISC must be set up as a separate corporate entity and is exempt from federal income tax under Sec. 991. A company that exports goods can use the IC-DISC for up to a 50% tax deduction on its export income.

How it Works

The manufacturer (or supplier) of the exported good pays a tax-deductible commission based on foreign taxable income to the IC-DISC, which distributes that commission to its shareholders as qualified dividends. In other words, through the IC-DISC, ordinary income is converted to qualified dividend income. For example, if a manufacturer is normally taxed at a 35% corporate rate, the shareholder saves 15% in taxes by paying a qualified dividend income at 20% instead.

Eligibility

• The business that is exporting items must be profitable
• The export must have less than 50% of its value made of imported components
• The product must be manufactured, produced, grown or extracted in the U.S.

Benefits

• Sales commissions paid to the IC-DISC are tax deductible to the operating business
• The IC-DISC is a tax-free entity, so the taxable income it earns escapes taxation
• Dividends paid to the shareholders are taxed at favorable dividend rates—20%
• Profits may be accumulated for estate planning
• Income can be shifted to lower tax bracket taxpayers
• IC-DISCs can work with C-corps, S-corps, LLCs or partnerships

There are a number of complex rules on how to compute sales commission, so you will want to check with an expert to ensure you are maximizing your tax benefit. Tax Point Advisors can help you benefit from this excellent opportunity for tax savings.

Click here to request a free IC-DISC assessment. 

To learn more about tax benefits from the IC-DISC, simply fill out the form on this page and a member of our team will be in touch with you. Or, you may call us at (800) 260-4138 nationwide.