IRS Nixes Repatriation Tax Strategy

Agency rules out certain deals that let U.S. companies skip paying tax when using offshore cash.

The U.S. Internal Revenue Service will prevent companies from entering into transactions that allow them to tap their offshore cash stockpiles without paying taxes, the government said.

“The IRS and the Treasury Department believe that these transactions raise significant policy concerns,” the agencies said in a notice Friday.

Two Transactions

The IRS notice describes two types of transactions it is trying to prevent and says the agency is “aware” that taxpayers are engaging in them. One involves selling a patent from a U.S. company to a foreign subsidiary without triggering an immediate U.S. tax.

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