Foreign Companies In The US - Partnerships
Foreign corporations that have effectively connected income must file a tax return.

Foreign Controlled Corporations
Each FCC, unless specifically exempt or dissolved, must file a tax return.

Controlled Foreign Corporation
A US person who is a shareholder of a CFC is potentially liable for US tax and required to keep records.

DISC

A corporation must elect IC-DISC status by filing Form 4876-A, Election To Be Treated as an Interest Charge DISC, with the Internal Revenue Service Center where it files Form 1120-IC-DISC, Interest Charge Domestic International Sales Corporation Return. An officer who is authorized to sign for the corporation must sign the form.

A corporation electing IC-DISC status for its first tax year must file Form 4876-A within 90 days after the beginning of the tax year. However, an existing corporation must file the form within the 90-day period immediately preceding the first day of the tax year.

For the election to be valid, every shareholder who is a shareholder on the first day of the corporation's tax year for which the election is effective must consent. Shareholders give their consent on the bottom of the Form 4876-A. Once the consent is made, it is binding on the shareholders and new shareholders.

An IC-DISC must file Form 1120-IC-DISC. Any corporate officer authorized to sign for the corporation must sign the form. The form must be filed by the 15th day of the 9th month after the tax year ends. No extension of time to file is allowed. It must be filed with the Internal Revenue Service Center where the common parent files. The IC-DISC should provide Schedule K to shareholders notifying them of distributions and deferred accumulated earnings.

A shareholder must file Form 8404, Computation of Interest Charge on DISC-Related Deferred Tax Liability, when it files its US income tax return for the tax year ending with or including the end of the IC-DISC's tax year for which the deferred income is reported.

An individual must pay the interest charge by the 15th day of the 4th month following the close of his or her tax year. A corporation must pay the interest charge by the 15th day of the 3rd month following the close of its tax year. To compute the interest charge, individual and corporate taxpayers should file Form 8404.

The TRA of 1984 replaced DISCs with FSC provisions to counter arguments from major trading partners that the DISC provisions constituted an illegal export subsidy under the General Agreement on Tariffs and Trade ( IC-DISCs exist, however, for small domestic taxpayers). FSCs were exempt from US tax on a portion of export income. The exempt income is generally at least 15% of the combined taxable income (CTI) earned by the FSC and its related supplier from qualified exports.

After the World Trade Organization (WTO) finally ruled in early 2000 that the FSC constituted an illegal trading subsidy, the US passed replacement legislation called The Extra-Territorial Income Exclusion Act.

This in turn was ruled illegitimate by the WTO, and after much to-ing and fro-ing, including the imposition of permitted tariffs by the EU during 2004 on many US imports, US President George W Bush finally signed a law in late 2004 which repealed the FSC-ETI legislation in favour of broader tax reliefs.

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Foreign Companies In The US - Partnerships
Foreign corporations that have effectively connected income must file a tax return.

Foreign Controlled Corporations
Each FCC, unless specifically exempt or dissolved, must file a tax return.

Controlled Foreign Corporation
A US person who is a shareholder of a CFC is potentially liable for US tax and required to keep records.