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.