What is Happening with Overseas Profits?

        One of the well-received parts of the Tax Cuts and Jobs Act (TCJA) of 2017, was that it encouraged corporations to bring their overseas profits back to the US. Often, companies will keep their foreign profits in other countries, or try to minimize them, to reduce their tax responsibilities. The new rules set in place by the TCJA lowered the tax rate on cash to 15.5%. Before this change, the tax rate was 35%.

          After a full year of the TCJA in effect, the Internal Revenue Service (IRS) is taking an active interest in companies that owe taxes on offshore profits. Auditors know that this is an area of tax law that can be easily abused. Currently, many companies who had taken advantage of the cut in the offshore tax rate are being audited to make sure they are following this aspect of the TCJA. If irregularities are found, the audits could expand to look to see what overall changes companies made to their tax strategies in 2017. IRS auditors are closely examining records to end tax avoidance schemes.

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