IC-DISC Services

Interest-Charge Domestic International Sales Corporations are domestic corporations formed to act as commission agents for export sales. Use of an IC-DISC may provide huge permanent tax savings for privately held U.S. exporters by allowing a portion of the profits from export sales to not be subject to corporate level taxation as follows:

• Owner-managed exporting company creates a tax-exempt IC-DISC.
• Exporting company pays IC-DISC a commission on the sale of export property, which is included in the income of the IC-DISC.
• Exporting company deducts the commission from ordinary income, thereby reducing its tax liability by 35% of the commission.
• IC-DISC pays no federal income tax on the commission because it is not a taxable entity.
• IC-DISC can distribute its income in the form of a dividend in the current year or in a future year, subject to deferral limitations.
• Shareholders pay income tax on dividends at the capital gains rate of 15%.

The benefits available under the IC-DISC regime are effective on a go forward basis, rather than being available for all prior operting tax periods (as was the case with the EIE). Because of this, the longer a taxpayer waits to form an IC-DISC, the less their available benefits will be.

Exporters that are good candidates for IC-DISC implementation include, but are not limited to, the following:

• Manufacturers that directly or indirectly export their products;
• Distributors who buy U.S. products and resell directly or indirectly overseas;
• Architectural and engineering firms who work on projects that will be constructed abroad (even though the work is performed in the Unites States)
• Software developers who sell or license their products overseas.