Strengthening the U.S. manufacturing sector and encouraging exports are key to sustaining our economy’s continued recovery . It’s equally as important to consider the 12 million people working to keep this vital industry on U.S. turf.
Manufacturers contribute about $2.1 trillion to the U.S. economy. In fact, if the U.S. manufacturing industry was a country, it would boast the ninth-largest economy in the world, sandwiched in between Brazil and Italy. The United States can’t afford to loosen its grip on a trade that contributes 12% of the nation’s GDP and continues to outperform other industries in areas like worker productivity. (Source: Bureau of Economic Analysis)
The U.S. economy has a lot to lose; overseas competition has forever changed the way we produce goods in this country. But manufacturing has seen some positive things come of the diminished employment rates and factory displacement that started nosediving around 2000.
In 1971, Congress designed a tax benefit to incentivize and reward certain export activities by reducing shareholders’ tax liabilities and providing an increased cash flow for businesses to reinvest in future global commercial activities.The Interest Charge–Domestic International Sales Corporation (IC-DISC) is the only export incentive available to manufacturers and their shareholders.
When it was clear that the manufacturing industry was in dire need of a financial favor, the government made this once-complicated and obscure tax incentive much easier to claim in 2003. Regrettably, thousands of eligible manufacturing exporters are still failing to take advantage of this tremendous benefit.
The IC-DISC benefit is an opportunity for manufacturing businesses to find additional resources to sustain their current labor force and hire new employees.
Do you qualify for the IC-DISC?
Manufacturers are excellent candidates for the IC-DISC if they are:
- U.S. companies that directly export their products
- U.S. companies that sell products destined for use overseas
- Pass-through entities and privately held corporations
IC-DISC was designed to help subsidize certain costs of business, and includes the following qualified export receipts:
- The exchange or sale of export property
- The lease of export property used outside the United States
- Subsidiary services
- Dividends of a related foreign export corporation
- Interest on obligations that are qualified export assets
- Architectural and engineering services for construction projects outside the United States
The IC-DISC benefit is available to a wide-range of manufacturers, and can be applied to indiscriminate types of exported goods.The following case studies are examples of typical exporting activities that can help businesses eligible to take advantage of the IC-DISC tax benefit.
Unlike other government-sponsored incentives like the Research and Development Tax Credit and 179D deduction, the benefits available under the IC-DISC regime are effective on a go-forward basis, rather than being available for all prior operating tax periods. Because these benefits are not retroactive, every year that a taxpayer does not elect to form an IC-DISC is a missed opportunity.
alliantgroup IC-DISC Services
alliantgroup provides customized services to meet the needs of each individual client. Services provided range from an initial benefit assessment to a full-scale IC-DISC implementation and outsourcing service.
For more information, please click here to contact alliantgroup.