IRS Issues Guidance on Transition Tax Filing and Payment Requirements

Abstract

The IRS has released Frequently Asked Questions (FAQ) to address a taxpayer's filing obligations and payment requirements with respect to the Code Sec. 965 transition tax, enacted as part of the Tax Cuts and Jobs Creation Act ( P.L. 115-97 ). The instructions in the FAQs are for filing 2017 returns with an amount of Code Sec. 965 tax. Failure to follow the FAQs could result in difficulties in processing the returns. Taxpayers who are required to file electronically are asked to wait until Apr 2, 2018, to file returns so that the IRS can make system changes. In general, Code Sec. 965 imposes a onetime tax on the untaxed post-1986 foreign earnings of foreign subsidiaries of US shareholders by deeming the earnings to be repatriated.