Update: Repatriation Tax (Notice 2018-26)

On April 2, 2018, the Department of the Treasury and the IRS released their third notice on the Toll Tax also known as the Repatriation Tax (Notice 2018-26)

Some of the key guidance provided in this latest notice which affect US individuals living abroad are:

  • Extension of time to pay the first installment of the Toll Tax for US individuals living abroad until June 15, 2018, the same date as the automatically-extended personal tax return deadline for these individuals.
  • Clarification on the allowable deductions for US individuals subject to the Toll Tax, who wish to make an election to be taxed similar to a US domestic corporation (i.e. §962 election)
  • US partners holding less than 5% in a partnership structure with investments in US domestic corporations may not be subject to the Toll Tax
  • If a foreign corporation filed an election to be treated as a tax-transparent entity (i.e. check-the-box election) after November 2, 2017, the Toll Tax may still be attributed to its US individual shareholders for the 2017 tax year.

From a practical perspective, US individuals (US national, US green card holder, US tax resident) residing abroad who are investors in a structure holding directly and indirectly, 10% ownership in a US domestic corporation should carefully review their toll tax exposure before June 15, 2018.

For more information, a complete copy of the notice can be found in the following link: https://www.irs.gov/pub/irs-drop/n-18-26.pdf

Contact Us

Richard Barjon, CPA
PwC | US Tax Director
+41 58 792 13 53
richard.barjon@ch.pwc.com

Published by

Richard Barjon

Richard Barjon

Richard Barjon
US Tax Director
PwC
Birchstrasse 160
Postfach, 8050 Zürich
+41 58 792 1353

Richard Barjon is a Director and leads the US Individual Tax Team of PwC in Switzerland. He has 15 years of experience assisting US and foreign individuals (expatriates, senior executives, high net worth families) residing outside of the United States with their US income, gift and estate tax compliance requirements and cross-border tax planning. Richard is a Certified Public Accountant (CPA), a member of the American Institute of Certified Public Accountants (AICPA) and of the Society of Trust and Estate Tax Practitioners (STEP).