IC DISC Marketing

CPA and accounting firms with developing international tax practices turn to Flashpoint Marketing for assistance with IC-DISC lead generation. This once fading tax incentive for exporting companies has re-emerged due to changes in tax laws over the last five years.

Information on IC DISC

It is the last export incentive available to U.S. exporters (since the termination of the earned income exclusion -EIE in 2006). It did not become popular until the Jobs and Growth Tax Relief Reconciliation Act of 2003 lowered the capital gains tax rate increasing the tax saving opportunities for exporters. It is a domestic company that does not require employees, offices, or assets. The technical entity structure is a C-Corp, typically incorporated in Delaware, that elects to be treated as an IC-DISC.

 Eligibility

Unfortunately, not every company meets the criteria to take the IC-DISC selection. The company must be private and organized as a S-Corp, partnerships, LLCs, or closely-held C-Corps. In addition, the company must also satisfy several other requirements including:

• A  single class of stock with an aggregate minimum par value of $2,500;
• 95% of gross receipts involve goods manufactured in the U.S.;
• 95% of the assets of the IC-DISC is inventory for export ;
• Separate records are maintained by the IC-DISC; and
• The IC-DISC is not a member of a foreign sales corporation.  

Generally speaking the following industries have taken advantage of IC-DISC:

• Manufactures
• Distributors
• Software Companies
• Engineering/Architectural Firms – Working on Structures in Foreign Countries

IC-DISC Operation

The mechanics of how an IC DISC operates are somewhat complex. A summary level explanation of how the tax savings is realized by the shareholders is outlined below.

• SAMPLE Company forms a tax-exempt IC-DISC;
• SAMPLE Company pays a commission to the IC-DISC based upon a determined rate;
• SAMPLE Company deducts the commissions from its ordinary income taxed at 35%;
• The IC-DISC pays no tax on the commissions because it is tax-exempt;
• The IC-DISC distributes dividends to its shareholders which are taxed at the capital gains rate of 15%;
• The resulting tax savings are 20% of the commissions.

Contact IC DISC Lead Generation Professionals

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