Interest Charge-Domestic International Sales Corporation (IC-DISC)

The IC-DISC is the last surviving federal income tax incentive for U.S. companies that have products or services delivered outside of the United States. The IC-DISC is a separate legal entity and S-Corporations, individuals and partnerships are eligible to be shareholders.

The recent passage of the American Taxpayer Relief Act of 2012 provides permanence for the IC-DISC.  As such, the IC-DISC provides a permanent federal income tax reduction to the shareholders of the IC-DISC. This permanent tax savings is realized when the exporting company deducts the commission it pays to the IC-DISC from its ordinary income. This commission would typically be deductible at 39.6 percent. IC-DISC is a tax-exempt entity, and a 23.8% percent tax is paid on qualified dividends to the shareholders of the IC-DISC. Thus, a reduction in federal income taxes from 39.6% to 23.8% on qualified export sales is realized.

IC-DISC Benefits:

Permanent tax savings on qualified export sales to increase your bottom line.

Increased liquidity for shareholders that is available throughout the year.

High return on investment with no change to your normal operations.