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Once you’ve done your research into the origins of the IC-DISC program and used our Potential Savings Calculator to learn just how much per year you could save by maximizing your after-tax income, you may feel ready to take on the task and set up your IC-DISC yourself.
While we’ve met with businesses in the export industry that have set up their IC-DISCs without utilizing expert help, we’ve generally found that they took more than a few risks in doing so.
Today, we’d like to look at the risks of taking a DIY approach to IC-DISC instead of speaking with someone who has experience and knowledge of the program’s complexities.
First — There Are Hoops to Jump Through.
The program is designed to need continued supervision and management in order to maximize its potential and stay in compliance with federal regulations.
The IC-DISC is pretty complex, and it includes quite a few hoops that the CPA, business owner, or tax consultant will need to continue jumping through to keep the IC-DISC in a Qualified status.
An exporter who’s busy focusing on growing his or her business in a competitive global marketplace would be bogged down by trying to work out the IC-DISC requirements and maintaining an IC-DISC Qualified status.
Can’t a CPA Just Manage the IC-DISC?
Many of our clients come to us due to being referred by their CPAs or even after an unsuccessful experience with a CPA attempting to administer the IC-DISC.
In our experience, CPA firms usually lack the infrastructure to work with administering the IC-DISC. While on the surface it seems as simple as filing a tax return, the truth is that the IC-DISC is quite a bit more complicated than the usual corporate tax forms.
Since management of an IC-DISC includes required actions and testing of the IC-DISC over time to maintain status, CPA firms generally just don’t have the infrastructure to handle it.
Have you ever noticed that many CPA firms specifically choose not to administer 401K plans, and that it seems like most firms that do work with 401Ks specialize in that alone? There’s a reason for that.
An IC-DISC is conceptually similar to a 401K in the sense of how it’s administered, and the continued management of an IC-DISC is very different from the core services most CPAs choose to focus on.
Can’t I Just Set Up an IC-DISC and Assume My CPA Will Continue Administering It?
In our experience, this is not advisable.
We have met with clients before who believed their CPA firm was administering their IC-DISC, while the CPA firm assumed the exporter was administering the IC-DISC.
Such miscommunication of expectations and actions could lead to missed deadlines and overlooked responsibilities, leaving the IC-DISC Disqualified and potentially costing the exporter their potential tax savings — not to mention causing scrutiny and concern from the IRS.
The exporter could end up facing not just the loss of the IC-DISC savings, but also fines and penalties for trying to use a Disqualified IC-DISC.
Choose Expert Help For Your IC-DISC. Choose Export Advisors.
With the complexities of the IC-DISC and the need for continued action and administration throughout its lifespan, we really do advise working with a business that specializes in and has long-term experience with the IC-DISC program.
Companies that attempt to administer the program themselves, or that rely on a more generalized CPA firm to administer it, often find themselves dealing with serious problems down the line that could have been avoided.
With Export Advisors, we can offer what amounts to a turnkey service to qualifying exporters. We completely handle the setup and ongoing administration of your IC-DISC. We have several options to choose from depending on how involved you would like to be in the administration, so you have full control over your experience working with us!
Working with Export Advisors to implement and administer your IC-DISC helps you maximize your after-tax income without having to worry about losing your Qualified status after an IRS audit. Reach us by phone at (832) 654-9889 or contact us online at any time to learn more about the program and get started today!
