IRS considers relief for corporations from double taxation for repatriation

Advice

The Internal Revenue Service said it may provide relief from double taxation in some circumstances to corporations because of the repatriation tax under the Tax Cuts and Jobs Act.

The IRS said Friday it has determined that in unique circumstances, such as where a corporation paid an unusual dividend for business reasons, not because of the enactment of the Tax Cuts and Jobs Act, it may be appropriate to offer relief from double taxation. When the same earnings and profits of foreign corporations are taxed both as dividends and under section 965 of the Tax Code, double taxation could result.

The IRS said it is open to considering relief from such double taxation where there is no significant reduction in the resulting tax by application of foreign tax credits, such that the taxpayer would be required to pay more tax than it would have if the dividend had not been paid. Taxpayers who have fact patterns that may match these limited circumstances can raise them with the IRS by contacting the Office of Associate Chief Counsel (International) at (202) 317-3800.

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