The IRS has announced that it has become aware of limited circumstances in which it may be appropriate to provide relief from double taxation resulting from the application of the repatriation tax under Code Sec. 965, as amended by the Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97).
Relief may be appropriate in “unique circumstances,” such as where a corporation paid an unusual dividend for business reasons, not because of the enactment of TCJA. Double taxation could result when the same earnings and profits of foreign corporations are taxed both as dividends and under Code Sec. 965.
The IRS is considering relief from such double taxation where there is no significant reduction in the resulting tax by application of foreign tax credits, such that the taxpayer would be required to pay more tax than it would have if the dividend had not been paid.
Taxpayers with fact patterns that may fit these limited circumstances can raise them with the IRS by contacting the Office of Associate Chief Counsel (International) at 202-317-3800.