The American Institute of CPAs is asking the Internal Revenue Service to provide additional details on how it will be treating foreign corporate income under the new tax law.
The Tax Cuts and Jobs Act aims to encourage more U.S.-based multinationals to repatriate the trillions of dollars in foreign profits that have been held offshore in deferred taxes. The Section 965 transition tax requires various taxpayers that have untaxed foreign earnings and profits to pay a tax as if those earnings and profits had been repatriated back to the U.S. Last month, the IRS posted a Frequently Asked Questions page on its site to help corporate taxpayers deal with the new transition tax (see IRS offers more info on transition tax for multinationals). But the AICPA still has questions. In a letter Wednesday to IRS officials, the AICPA noted that corporate taxpayers need more information.
“In reviewing the FAQs, we have identified areas that remain uncertain or require additional clarification to allow taxpayers to properly calculate, report and pay their tax liabilities related to section 965,” wrote AICPA Tax Executive Committee chair Annette Nellen. “Updated guidance in these areas is needed immediately, as taxpayers are required to make their initial payment and elections related to section 965 by April 17, 2018, the original return filing deadline.”
In the letter, the AICPA described four scenarios where issues need to be clarified, along with some of its own recommendations. They include underpayments and overpayments of the initial installment of the tax liability owed by multinationals, along with unintentional nonpayment of the initial installment, and clarification of the required calculations and document retention.
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