US IRS provides guidance on section 965 deemed repatriation rules

The US IRS on June 27 released questions and answers to assist multinational taxpayers in applying section 965.

Section 965 was amended in the Tax Cuts and Job Act to require United States shareholders to pay a transition tax on the untaxed foreign earnings of certain foreign controlled corporations as if those earnings had been repatriated to the United States. The provision was needed for the US to transition from a worldwide taxation system with deferral to a quasi-territorial system.

The new section 965 Q&A guidance applies tax filings in years 2017 and 2018 as well as in other years.

The guidance addresses the election to pay the transition tax in installments. It also includes information about filing transfer and consent agreements arising under section 965(h) and (i).