International Middle Market and Foreign (Repatriated) Funds
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Jen: This is the PKF Texas Entrepreneur’s Playbook. I’m Jen Lemsamski, and I’m back with Frank Landreneau, one of our international tax directors. Frank, welcome back to the Playbook.
Frank: Well, thanks for having me. I appreciate it.
Jen: So, I’ve heard a little bit about a so-called toll or repatriation tax; can you explain to me what this is?
Frank: That’s right. Basically, under the new tax laws, it’s the change of regime of foreign earnings accumulated without being taxed until the earnings are brought back to going to more of an exemption system. So, the idea is we’re going to cleanse all foreign earnings by taxing it, and so anything that comes over as a repatriated dividend from this point forward most likely won’t be subject to tax.
Jen: What size company does that really affect? Is it middle market? Is it the big guys?
Frank: That’s a good question, because a lot of people think that tax reform was really only for the big guys. It really affects everybody who may have had a foreign corporation operating as an active trader business activity overseas.
Jen: So, for a middle market company, is it too late to do something about it or what’s the timeframe they need to be focusing on?
Frank: None at all. Actually, there are some considerations that need to be looked at. While tax liability on repatriated earnings need to have been made by April 15th in most cases for business entities, the final calculation most likely has not been determined. So now is the time to look at, “Have we been computing foreign earnings properly? Do we have our tax pools in order?” And while you may have paid a repatriation tax upon extension of your return that may not be the final tax you pay, so therefore there’s more that needs to be done before that final filing is made.
Jen: So, it sounds like they need to call you if they haven’t looked into it yet.
Frank: Absolutely. There’s definite things to look at. Like accounting methods that may have been done or taken or missed or different things like that, so there are things to look at.
Jen: Great. Well, we’ll get you back to talk some more international business with us soon.
Frank: Thank you very much. Appreciate it.
Jen: To learn more about other international topics, visit PKFTexas.com/internationaldesk. This has been another Thought Leader production brought to you by PKF Texas Entrepreneur’s Playbook.