The IRS has released a draft of Form 965 (Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System), as well as a draft of Schedules A through H (the Schedules) for the new form. Form 965 and the Schedules request various items for the 2017 and 2018 toll tax years (the Section 965(a) inclusion, the Section 965(c) deduction, disallowed taxes, etc.). While the IRS previously released certain questions and answers (Q&A) regarding reporting requirements and election procedures relating to the mandatory deemed repatriation of deferred foreign earnings (the ‘toll tax’) in the 2017 tax reform legislation (the Act), questions remain as to how these forms are intended to interact with (or replace) the transition tax statement that is required by the Q&A. (For prior coverage on the Act and the toll tax, see the 'See also' section at the end of the full publication, linked below.)
Of immediate interest, the IRS has not yet released instructions for these forms as of the date of this PwC Insight. A further PwC Insight will be released soon after the IRS finalizes Form 965 and the Schedules.
The release of draft Form 965 with the accompanying Schedules is the latest guidance issued by the IRS related to reporting, paying and making elections related to the toll tax. Form 965 and the Schedules closely follow previous reporting requirements (see prior PwC Insights) and provide additional guidance directed to assist taxpayers in reporting the toll tax.
Taxpayers should immediately review Form 965 with the accompanying Schedules. However, until accompanying instructions are published, taxpayers should be aware that Form 965 remains in draft form and is subject to additional change.
Partner, Washington National Tax Services ITS Leader, PwC US