Association of Americans & Canadians in Israel announces the relief
June 7, 2018/ 24 Sivan 5778
US Repatriation Tax Relief for Expat Business Owners
Relief from the June 15, 2018 US IRS deadline for payment of the US Repatriation Tax has been granted for expats by the US Treasury and the IRS.
Below is a letter describing the change, as explained by Monte Silver, a U.S. & Israel licensed lawyer, with whom the AACI has been cooperating to help those who own businesses in our English speaking community.
As always, AACI highly recommends that you seek professional guidance to assist in your decision-making.
June 5, 2018 To AACI Leadership from Monte Silver, Adv. (Israel & CA)
I am very pleased to advise you that after three months hard work in which many of you took part, the U.S. Treasury & IRS has granted expats certain relief from making the first payment under the Repatriation tax due by June 15.
The relief is as follows: An US living abroad who is an individual US shareholder of a controlled foreign corporation shall incur no acceleration of the 8 year payment plan, or other penalties, for failing to make the June 15, 2018 payment, if the total tax due from the expat under the Repatriation tax (i.e. in all the eight years) is less than $1,000,000.
In other words, if an expat has less than total Repatriation tax liability of $1,000,000, there is no real reason to make the June 15, 2018 payment! To obtain this relief all that is required is to make the 965(h) election. See Q&A #7 in the IRS link below so see how and when to make the election.
This is very meaningful relief. To reach $1,000,000 in total tax liability, an expat must have at least $6.5M in earnings and profits held in cash form, or $12.5M in non-cash form. Chances are that after taking into account foreign tax credits possibly available, expats with more than these cash/non-cash amounts will be covered by the relief.
The relief has no impact on filing and 965 election deadlines, which remain unchanged – June 15 or October 15 2018. Thus one might consider the benefits of filing for the Oct 15 extension by June 15, 2018