On July 10, the IRS updated the Instructions for Form 8975 and Schedule A (Form 8975).  Form 8975 (Country-by-Country Report) is used by taxpayers that are the parent entity of a U.S. multinational enterprise (“U.S. MNE”) with annual revenue of $850 million or more.  Taxpayers must file Form 8975 to report information related to the taxpayer’s MNE’s constituent entities on a country-by-country basis, including (i) each entity’s tax jurisdiction; (ii) country of organization and main business activity; and (iii) financial and employee information for each tax jurisdiction in which the U.S. MNE does business (i.e., revenues, profits, income taxes paid, accumulated earnings, and tangible assets).

Although the instructions are very similar to the prior version, the most notable change is the tax jurisdiction information required to be entered in Schedule A (Form 8975) (Tax Jurisdiction and Constituent Entity Information).  The new instructions explain that information reported on Form 8975 and Schedule A (Form 8975) is exchanged using the OECD Country Code List.  The instructions provide that the country code for the United States is “US” and the country code for “stateless” is “X5.”  The remaining country codes may be found in the IRS Country Code List, but there are several exceptions identified in the instructions that require special attention by filers. In particular, the instructions include a chart under Part I-Tax Jurisdiction Information that currently identifies seven tax jurisdictions for which the related country code should not be used.  Filers should carefully review the instructions when preparing Forms 8975 and the Schedule A (8975) to determine whether any applicable tax jurisdictions for which they must report are listed in the chart and determine the appropriate country code to use.

Most U.S. MNEs file their C-b-C reports electronically.  Special rules apply to those filers that must file Forms 8975 and Schedule A with paper returns such as the Form 990-T, Form 1120-REIT, and other returns specified in the instructions.  If a filer files on paper only, the filer must also mail a copy of page 1 of the Form 8975 to the IRS to notify the IRS that the filer filed a Form 8975 and Schedules A (Form 8975) with a paper tax return.  The new instructions changed the mailing address for submitting page 1 of the Form 8975 to: Internal Revenue Service, Mailstop 4950, 1973 N. Rulon White Blvd., Ogden, UT 84201.

Tags: C-b-C, Country-by-Country, Form 8975, Form 990-T, Instructions for Form 8975 and Schedule A (Form 8975), IRS Country Code List, Schedule A (Form 8975)
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Photo of Pooja Shah Kothari Pooja Shah Kothari

Pooja Shah Kothari is a member of the Tax Practice and Election and Political Law Groups. She has experience counseling clients on tax controversy matters at the Federal and state level. In addition, Pooja advises various tax-exempt and nonprofit organizations on a wide …

Pooja Shah Kothari is a member of the Tax Practice and Election and Political Law Groups. She has experience counseling clients on tax controversy matters at the Federal and state level. In addition, Pooja advises various tax-exempt and nonprofit organizations on a wide range of issues, such as federal tax exemption, unrelated business income tax, private benefit, inurement, and other tax rules, as well as entity formation and other corporate governance matters.

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Photo of Michael M. Lloyd Michael M. Lloyd

Michael Lloyd practices in the areas of tax and employee benefits with a focus on information reporting and withholding on cross-border payments (e.g., Forms 1042 and 1042-S) and Foreign Account Tax Compliance Act (FATCA), backup withholding, employment taxation, the treatment of fringe benefits…

Michael Lloyd practices in the areas of tax and employee benefits with a focus on information reporting and withholding on cross-border payments (e.g., Forms 1042 and 1042-S) and Foreign Account Tax Compliance Act (FATCA), backup withholding, employment taxation, the treatment of fringe benefits, cross-border compensation, domestic information reporting (e.g., Forms W-2, 1099, 1095 series returns), penalty abatement, and general tax planning and controversy matters. Michael advises large U.S. and foreign multinationals regarding compliance with information reporting and withholding issues, as well as a range of other federal and state tax issues.

Michael completed a three-year term on the IRS Information Reporting Program Advisory Committee (IRPAC) in 2013, during which time he worked with the IRS on FATCA, the Affordable Care Act (ACA or Obamacare) reporting issues, tip reporting, Form 1099-K reporting issues, and civil penalty administration. He has testified before the U.S. Treasury Department and the IRS regarding proposed federal tax regulations.

Michael’s experience includes serving as Tax Manager for a publicly traded multinational, where he managed federal and state tax examinations and appeals, including matters involving foreign taxes. In addition, he performed domestic and international tax planning, including issues related to the repatriation of foreign earnings, U.S. export tax benefits, research credits, and planning for foreign expansion.

Michael has appeared as a guest speaker on IRS Live and at seminars hosted by Tax Executives Institute (TEI), Thomson Reuters OneSource, IRSCompliance, the American Payroll Association (APA), the Blue Cross and Blue Shield Association, the National Association of College and University Business Officers (NACUBO), and the National Restaurant Association.

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