There’s bad news for companies that may have accidentally overpaid this year’s “repatriation” taxes on foreign profits: they won’t be getting a refund.
As Bloomberg reports, the Internal Revenue Service says in a new legal memorandum that it won’t rebate any such overpayments or credit them toward tax bills not tied to repatriation, such as annual bills for corporate income.
“A lot of taxpayers” who had expected reimbursement “are going to be disappointed,” is how independent tax and accounting expert Robert Willens summed up the situation in a client note today. “No such refund will be forthcoming.”
Multinationals that likely overpaid include those in the pharmaceutical and technology sectors, such as Pfizer and Apple, because they have the largest stockpiles of foreign profits, Willens says.
Andrew Silverman, a Bloomberg Intelligence analyst, says banks also are likely to be affected.
“I can’t think of another industry that is as conservative as banks with their taxes, but if there is, then they’d likely be overpaying, as well,” he says.
Under the Republican tax law enacted in December, companies started making payments for the 2017 tax year on an estimated $3.1 trillion in profits stockpiled overseas since 1986. Companies are required to tally up their foreign earnings and pay a two-tiered levy. The rates are 15.5% for cash and 8% on non-cash or other illiquid assets.
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IRS blocks refund for companies overpaying offshore profits tax
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