Nikole Flax, deputy director for the IRS Large Business and International Division, said Tuesday that the guidance would update an FAQ page released March 24, which specified that payments due after April 1 under Internal Revenue Code Section 965(h)
, the Tax Cuts and Jobs Act 's deemed repatriation tax, would be delayed until July 15. "There will be additional guidance coming out in the 965 area related to these claims, so I would encourage you to be on the lookout for that," Flax said during a KPMG LLP webcast.
Before 2017, companies could indefinitely defer taxation on income earned offshore by delaying its repatriation. This caused a massive buildup of foreign income by U.S. companies, generating criticism and prompting lawmakers from both parties to push for a territorial system that only taxes income earned in the U.S.
The TCJA followed through on this policy, but enacted a one-time transition tax on that income at 15.5% for cash or cash-equivalent holdings and 8% for other investments. While the tax is levied in 2017, when the law was enacted, companies could elect to pay it in annual installments over 10 years.
The novel coronavirus pandemic has prompted the IRS to extend many of its filing deadlines while companies struggle to maintain their operations. Aside from Section 965, the IRS is allowing foreign financial institutions to delay filings under the Foreign Account Tax Compliance Act, and will delay payments on several tax obligations that would otherwise be due before July.
The agency also announced it would delay filing requirements for foreign governments to comply with FATCA. The IRS has also said it will accept scanned documents for required signatures and also accept applications for net operating losses by fax.
The IRS did not respond to requests for further comment.
--Editing by Neil Cohen.
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