IC-DISC is the export tax incentive for small and medium manufacturing organizations. The somewhat intimidating acronym stands for "Interest-Charge Domestic International Sales Corporation." This benefit provides a tremendous opportunity for businesses, but often goes underused or even worse, not used at all.
If you're interested in knowing more about the benefit, check out these important IC-DISC facts:
1. Who can benefit?
Qualifying organizations usually fall into one or more of these three categories:
1.) A US-based company exporting goods directly to manufacturers.
2.) A US-based company providing engineering services for buildings or bridges that are being built somewhere outside the United States.
3.) A US-based company manufacturing a product that is included with another product being exported.
2. How many companies are eligible?
Currently, about 6000 small to medium-sized businesses are taking advantage of the incentive, however, there are thousands more currently eligible but aren't claiming the benefit.
3. Could we be audited?
Yes, an audit is possible because the IRS is now making sure businesses are following all the rules associated with IC-DISC. To avoid an audit, businesses should focus on these key areas:
1.) The DISC is accurately created and properly maintained
2.) The export property is accurately qualified as an exporting good from the US
3.) That all commissions are calculated properly
4.) Avoiding any documented errors on the return form 1120
4. What is the biggest mistake companies make with IC-DISC?
This tax incentive is also available to a company making a component part included in a product that's being exported. Many companies making the part don't realize they are eligible and fail to claim it.
5. How do I get started?
Check out our new complimentary IC-DISC commission calculator resource on our website to get an early estimate of what your potential commission could be. Then, contact us to see how we can begin the process of establishing your status so you can reap the many benefits this important incentive has to offer.