Guest Blogger: Dr. Allison Evans, associate professor of accounting, Cameron School of Business
U.S. exporters can potentially generate large tax savings - roughly 20 percent of their original tax bill - by forming an IC-DISC (Interest-Charge Domestic International Sales Corporation). The most common type of IC-DISC acts, at least on paper, as the exporter’s sales agent. Yet, while the IC-DISC does have recordkeeping and capital requirements, it does not need to have a physical location, employ a single person or interact with any customers. In essence, it can be invisible to those who do business with the exporter, but yield a substantial reduction in the exporter’s tax bill.