On October 11, 2004, the American Jobs Creation Act of 2004 was passed which repealed the Extraterritorial Income Exclusion (ETI). This act reduces ETI benefits to 80% in 2005 and 60% in 2006. After 2006, ETI no longer exists. The IC-DISC is now the only 100% safe harbor export tax incentive available.

Don’t suffer the loss of your export tax benefits. Contact Ms. Tamara Crews, Vice President – Professional Markets, today at 800-894-8366 or tcrews@exportassist.com. With Export Assist’s Managed IC-DISC, you can immediately start to receive greater benefits than with ETI.

Plan A
Under the Extraterritorial Income Exclusion (ETI) Act of 2000, U.S. exporters with annual export gross receipts exceeding $5,000,000 are obligated to perform a minimum number of export economic activities, e.g., foreign economic processes (FEP), outside of the United States in order to be eligible for the export tax benefit. These requirements consist of the:

• sales activities test, including solicitation, negotiation or making of a contract
• direct cost test, including advertising and sales promotion, processing customer orders and arranging for delivery, transportation, determination and transmittal of a final invoice or statement of account and/or receipt of payment, and assumption of credit risk.

In order to be assigned the greatest export-related taxable income, the exporter can perform the maximum number of these activities, thereby providing the broad foundation needed for Section 482 Transfer Pricing. This enables the exporter to garner the largest export income exclusion.

Plan A, including Export Assist’s services, is illustrated below.

If the exporter misses or needs to re-evaluate any ETI compliance steps before the close of the 2001, 2002, or 2003 tax years, it is still possible to analyze the activities concluded during the normal course of business and to forensically comply with FEP requirements. In such a case, Export Assist’s FEP Forensic Advisory Services help you to identify the basic or minimum number of recorded FEP activities needed to comply with the Internal Revenue Code under ETI in each particular year.