Trade & Customs
Maximum foreign content (by FMV) in qualified export property
Top qualified-dividend rate on IC-DISC income, vs. up to 37% ordinary
Annual qualified export receipts eligible for tax-deferred treatment
Regulation Overview
The Interest Charge Domestic International Sales Corporation is an elective US federal export tax incentive, not a regulatory mandate. A US exporter pays a tax-deductible commission to a separate, tax-exempt IC-DISC on qualifying export sales. The IC-DISC pays no federal income tax on that commission and distributes it to shareholders as qualified dividends, converting income otherwise taxed at ordinary rates into dividend income taxed at lower rates.
It is a rate arbitrage—not a universal exemption, guaranteed saving, or automatic conversion of all export profit. Only qualified export property counts: US-made goods, sold for use outside the US, with no more than 50% foreign content. IC-DISC compliance therefore rests on the same origin and content substantiation that underpins Buy America and country-of-origin determinations.
US manufacturers, producers, growers, or extractors that export
US distributors and resellers of US-made goods sold for foreign use
Closely-held and pass-through exporters (S corp, partnership/LLC, sole proprietor), who often benefit most
C-corporation exporters weighing an IC-DISC alongside the FDII/FDDEI deduction
Exporters selling through unrelated foreign buyers or foreign-destined distributors
Qualifying engineering and architectural firms on foreign construction projects (limited cases)
Key Thresholds
The 95% receipts and assets tests are pass/fail—miss by a point and the IC-DISC is disqualified for the year. A single sourcing shift can quietly push a product's foreign content above 50% mid-year. Reconstructing bill-of-materials evidence after the fact, across hundreds of parts, consumes weeks your team doesn't have.
Content is tested at the product level, by fair market value—not at the finished-shipment level. Imported components steadily erode the margin, and assemblers are most exposed. Without BOM-level compliance intelligence, you can't calculate actual US content, let alone prove it to an examiner line by line.
Qualified export receipts require goods delivered for direct use, consumption, or disposition outside the US—including sales through distributors. One missing bill of lading or export declaration disqualifies the receipt. Tracing destination across multiple tiers from spreadsheets and email leaves gaps no one sees until audit.
An IRS IC-DISC exam can demand per-transaction BOM and shipment evidence years after the sale. Spreadsheets and inboxes cannot produce an audit trail on that timeline. Teams spend the exam window rebuilding documentation that should have existed from day one—while benefits sit at risk.
Certivo In Action
Certivo in Action — IC-DISC Workflow
Features Tabs
Per-Transaction Evidence on Demand
Continuous compliance monitoring and audit readiness replace exam-window reconstruction. Every content calculation and export proof is retained and traceable—so an IRS IC-DISC exam is a retrieval task, not a fire drill.
50% Content Test, Automated
BOM-level compliance intelligence computes US content across your portfolio in days, not the weeks of manual spreadsheet work that substantiation usually demands.
Catch Threshold Drift Before It Costs You
When sourcing shifts, Certivo re-tests affected products and flags any that fall below 50% US content—so a quiet supplier change doesn't silently disqualify an export receipt.
Frequently Asked Questions
Who qualifies for IC-DISC benefits?
Any US exporter selling qualified export property—goods made in the US, sold for use outside the US, with no more than 50% foreign content—can generally benefit. Closely-held and pass-through exporters often see the most value. Certivo helps confirm the content and destination facts; your tax advisor confirms your eligibility and structure.
Does Certivo prepare IC-DISC tax filings?
No. Certivo does not provide tax preparation or tax advice. CORA prepares the qualified export property evidence, BOM-level US-content substantiation, and export proof your advisor relies on to compute the commission and file Form 1120-IC-DISC. Certivo is the documentation and audit-readiness layer beneath the return.
How does Certivo prove the 50% US-content test?
CORA parses supplier invoices, bills of materials, and country-of-origin declarations, extracts fair market value and origin to the component level, and computes US versus foreign content for each product. It flags products near or below the threshold and re-tests automatically when sourcing changes—so IC-DISC compliance stays current.
Did the 2025 tax law change IC-DISC?
No. The One Big Beautiful Bill Act (July 2025) left IC-DISC rules intact and preserved the rate structure, keeping the arbitrage between ordinary rates and the lower qualified-dividend rate in place for 2026. Certivo keeps the underlying export evidence audit-ready; consult your advisor on how the rates apply to your facts.
What does an IRS IC-DISC audit focus on?
Examiners concentrate on two provable facts: that goods were genuinely shipped for use outside the US, and that each product met the ≥50% US-content threshold by bill of materials. Certivo keeps both—destination proof and BOM content evidence—audit-ready per transaction, so IC-DISC compliance holds up under scrutiny.