IC-DISC Export Tax Incentive

Reduce tax liability on export income with IC-DISC set-up and maximization strategies.

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A frequently overlooked U.S. tax provision known as the “IC-DISC” offers substantial permanent U.S. tax savings for U.S. taxpayers in the “supply chain” for U.S. exported products.

A significant reduction in tax liability for many U.S. taxpayers

The IC-DISC tax savings are achieved from a reduced 23.8% (or lower) U.S. tax rate on at least half of the income derived from U.S. exported products, in lieu of the normal Federal tax rate of up to 40%.

Those eligible for the IC-DISC tax benefit include U.S. taxpayers engaged in any one of the following supply chain activities for U.S. exported products or their components:  manufacturers, growers, farmers, processors, wholesalers, distributors, retailers, and others. Any U.S. taxpayer engaged in any one of these supply chain activities can qualify for IC-DISC benefits, whether or not they are the actual exporter of the U.S. products.

The IC-DISC benefit is also available to U.S. engineering and architectural firms that perform work related to foreign projects, even when some or all of the work is performed outside of the U.S. In many cases, construction or development oversight and other related activities performed abroad by U.S. engineering and architectural firms may also qualify for IC-DISC benefits.

RELATED INSIGHTS

Meet our IC-DISC Export Tax Incentive Leaders

Mari Nakajima

Mari Nakajima

Director, International Tax

BPM has the Leading IC-DISC Practice in the U.S.

Our IC-DISC practice is nationally recognized and the largest in the U.S. BPM has over 500 IC-DISC clients across the U.S. representing all major industries, including many well-known and top-tier exporting companies. We can help you take advantage of this powerful U.S. tax incentive by quickly and reliably determining the viability and estimated benefits of the IC-DISC in your specific circumstances.

We provide comprehensive IC-DISC services, including:

  • IC-DISC incorporation and all requisite organizational formalities, such as EIN, IC-DISC election, state government filings, and set-up of general ledger and chart of accounts;
  • Establishment of “shared IC-DISC” arrangements for use by multiple taxpayers, including both related and unrelated parties;
  • Turn-key implementation of relevant IC-DISC substantive provisions, such as export AR factoring, producer loans, and ancillary services;
  • On-going management of annual IC-DISC formalities, including state filings, qualified assets and income compliance, general accounting services, and year-end financial statements; and
  • Annual IC-DISC tax compliance, including comprehensive IC-DISC commission and factoring calculations, and completion of IRS Form 1120-IC-DISC and supporting schedules.

Support for IC-DISC needs of other CPA firms

We frequently work collaboratively with clients otherwise serviced by other CPA firms, so welcome opportunities to support other CPA firms that don’t have the requisite IC-DISC expertise. In working with clients of other CPA firms, we always observe a strict “fire-wall” between the IC-DISC services we provide such clients and the core relationships they have with their existing CPA firms.

Simply stated, BPM will never compete to provide other non-IC-DISC services to clients of other CPA firms that rely upon us to meet their IC-DISC needs.

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