Articles

Extension of Federal Tax Deadline Applies to Liabilities of Multinational Taxpayers by Arthur J. Dichter, JD, LLM

View Arthur's Profile
Posted on March 25, 2020 by Arthur Dichter

The IRS has clarified that the postponement of the due date for 2019 federal income tax filings and payments to July 15, 2020, also applies to installment payments of repatriation tax on foreign earnings and base erosion and anti-tax abuse tax (BEAT) that would otherwise be due on April 15.

The Tax Cuts and Jobs Act introduced a one-time “deemed repatriation tax” (also known as the 965 Transition Tax) on previously untaxed profits earned after 1986 that foreign entities earned and left overseas. Under the law, U.S. shareholders with at least 10 percent voting power in a controlled foreign corporation (CFCs) could elect to pay this transition tax over eight annual installments. The law also introduced the BEAT as a minimum tax imposed on some of the deductible payments that U.S. corporations may pay legally to their foreign affiliates as interest, royalties and other intracompany service expenses or to acquire depreciable property.

The government’s response to the COVID-19 pandemic is evolving rapidly; relief that may not be available today may be offered in the near future. Individual taxpayers should speak with their accountants to assess how the spread of the virus is impacting them and their businesses and how they may implement strategies that take advantage of current market conditions and rely on government assistance.

About the Author: Arthur Dichter, JD, LLM, is a director of International Tax Services with Berkowitz Pollack Brant Advisors + CPAs where he works with multi-national businesses and high-net-worth foreign individuals to structure assets and build wealth in compliance with U.S. and foreign income, estate and gift tax laws. He can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at info@bpbcpa.com.

 

Information contained in this article is subject to change based on further interpretation of tax laws and subsequent guidance issued by the Internal Revenue Service.