The statistics producers' corner: international statistical studies.
Statistical studies based on tax return information related to international taxation are conducted annually, or less frequently, in two broadly defined areas: Business activities of U.S. persons (individuals and businesses) abroad and business activities in the United States by foreign persons. Activities by corporations are the focus of most of these studies; other studies focus on the activities of individuals, partnerships, estates, and trusts.(2)
STUDIES OF ACTIVITIES ABROAD OF U.S. PERSONS
The studies of business activities of U.S. persons abroad are based on income-tax return information related to several areas of international taxation, the most important of which are those related to the foreign tax credit and to controlled foreign corporations. The corporate foreign tax credit was enacted to mitigate the potential of double taxation of foreign-source income of U.S. persons by allowing a credit against U.S. tax liability for foreign taxes paid or accrued. The corporation foreign tax credit study, which is based on information filed in support of this credit, is prepared annually and provides information on incomes, deductions, tax, and other items by industry of the U.S. corporation, by foreign country, and by category of income for which the credit was claimed. The study for 1993 showed that U.S. corporations claimed approximately $22 billion in foreign tax credits. The 1994 study is scheduled for release later this year. Individual taxpayers also may claim a foreign tax credit for certain foreign taxes paid or accrued and may claim, if they qualify, an exclusion of up to $70,000 for income earned while they lived and worked in a foreign country. This study of foreign earned income, which was most recently completed for 1991, is prepared every five years and provides information on incomes, deductions, and taxes, by country (of taxes paid and of residence) and by the category of income for which a credit was claimed. The study for 1996 is scheduled for release in 1998.
Controlled foreign corporations (CFCs) are foreign corporations for which more than 50 percent of outstanding voting stock, or more than 50 percent of the value of all outstanding stock, is owned during the tax year by U.S. shareholders. Information on the incomes, deductions, assets, liabilities, related-party transactions, and other items by industry (of the parent corporation and of the CFC), by country of incorporation, by principal place of business, and by asset size, is tabulated for even-ending years. The CFC study for 1992 showed that large U.S. corporations (those with $500 million or more in assets) controlled 38,031 of these foreign corporations. The study for 1994 is scheduled for release later this year.
Two studies are prepared that relate to tax benefits provided to U.S. corporations that export. Studies of the activities of foreign sales corporations (FSCs) are prepared every four years; the most recent study is for 1992. FSCs are corporations, usually controlled by a U.S. person, that operate in a qualifying foreign country or U.S. possession that receives tax benefits (i.e., partial exclusion of income) relating to their export activity. Income, deductions, and other items are tabulated by country, by product or service type, and by pricing method. A similar study, interest-charge domestic international sales corporations (IC-DISCs), is prepared approximately every four years. IC-DISCs, which are small domestic corporations, also receive tax benefits (deferral of taxation) for sales of exports. IC-DISCs are generally smaller that FSCs because they are limited to $10 million in qualifying export receipts. The most recent study of IC-DISCs is for 1991. The study for 1996 is scheduled for release in 1998.
In addition to the studies of business activities abroad by U.S. persons, there are several studies on specific types of activities. A study of U.S. possessions corporations is prepared every two years on the activities of domestic corporations that qualify for a possession's tax credit by deriving at least 80 percent of gross income from sources within a qualifying U.S. possession and at least 75 percent from the active conduct of trade or business in the possession. Income, deductions, and other items are tabulated by industry, by pricing method, and by U.S. possession. The most recently completed study is for 1993; the study for 1995 is scheduled to be completed in 1998. An annual study of international boycotts is based on tax provisions requiring that U.S. entities with business operations in countries that participate in international boycotts unsanctioned by the U.S. government to report these activities to the IRS, potentially losing tax benefits. The study for 1994 is schedule for release in 1997.
STUDIES OF FOREIGN BUSINESS ACTIVITIES IN THE UNITED STATES
The second broad area of international studies in the SOI program relates to foreign business activities in the United States. The two most important studies of this type are prepared annually and cover the activities of domestic corporations controlled by foreign persons and foreign corporations with income derived from U.S. sources. Domestic corporations controlled by foreign persons is a study of corporations that are incorporated in the United States and whose voting stock is 50 percent or more owned by a foreign person. Incomes, deductions, assets, liabilities, and tax items are available by country of foreign owner and by industry. The study for 1993 showed that there were 54,000 of these domestic corporations with $1.3 trillion in total receipts. Foreign corporations with income derived from U.S. sources is a study of these corporations that are subject to U.S. tax on U.S.source income. The study shows incomes, deductions, and tax items by county of incorporation and by industry. For 1993, there were 10,500 of these corporations reporting $75.5 billion of total receipts from their business operations. Both of these studies for 1994 are scheduled for release later this year.
Another annual study of foreign-owned corporations with U.S.-source income, foreign-owned corporation transactions (with related parties), is based on annual information returns, most recently for 1993. These studies are only for larger returns, those with $500 million or more in total receipts, and show related-party transactions by country of related party and by industry. The study for 1994 is scheduled for release later this year. Three annual studies are based on reports related to withholding of taxes: foreign recipients of U.S. income; sales of U.S. real property interest by foreign residents; and U.S. partnership income of foreign partners. The first two are available for 1994; the third is available for 1993. All three will be updated later this year.
RECENT DEVELOPMENTS IN ELECTRONIC DISSEMINATION
SOI studies, including the international studies, have generally been made available in the quarterly SOI Bulletin. Annual reports on individual and business tax returns are also available, as well as special compendiums of research and analysis in other areas, including tax-exempt (or nonprofit) organizations, estates and personal wealth studies, and studies of international taxation issues (as described previously). Other research and technological articles are published in a methodology series. In addition, there has been a shift toward dissemination using electronic media, which are less expensive to produce, provide for more-timely availability of the data, and allow for easier analyses by users.
In the fall of 1996, a selected group of SOI and other IRS products became available to the public in the "Tax Stats" area of the IRS Home Page. Like other areas of the IRS Internet Home Page system, files in the "Tax Stats" area are free to the public. Currently, limited data files on individuals, sole proprietorships, corporations, partnerships, tax-exempt organizations, estates, wealth, international studies, and excise taxes are available. For the most part, these data do not represent the most current year available; in the near future, however, data for the most current year will be obtainable for a fee from SOI's Electronic Bulletin Board (EBB) system. The URL address to access the IRS-Statistics of Income World Wide Web Home Page is http://www.irs.ustreas.gov/prod/tax_stats/index.html. The SOl EBB can be accessed on 202-874-9574.
For general information about SOI programs, contact Tom Petska at 202-874-0395. For additional information about the international studies programs, contact Chris Carson at 202-874-0304. Requests for publicly available data can be made at 202-874-0410.
1 Tom Petska, Fritz Scheuren, and Bob Wilson, "Information from Tax Returns: The Statistics of Income Program of the Internal Revenue Service, Part 1," Business Economics, April 1992; and Tom Petska and Fritz Scheuren, "Information from Tax Returns: The Statistics of Income Program of the Internal Revenue Service, Part 2," Business Economics, July 1992.
2 This article describes studies relating to corporations, individuals, and partnerships. For a complete listing of the international studies of the SOI program, see Sarah Nutter, "Statistics of Income Studies of International Income and Taxes," Statistics of Income Bulletin, Winter 1993-94.
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|Title Annotation:||Internal Revenue Service program|
|Author:||Parker, Robert P.; Grove, C. Brian|
|Date:||Apr 1, 1997|
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