The Treasury and IRS have issued guidance on Country-by-Country (CbC) information reporting by national security contractors. The guidance modifies CbC reporting for specified national security contractors. The guidance defines a specified national security contractor as:
- a U.S. multinational enterprise (U.S. MNE);
- 50 percent of its annual revenue in the preceding reporting period;
- is attributable to contracts with the Defense Department or other U,S. government intelligence or security agencies.
The IRS will amend the regulations and the rules will apply to CbC reports and amended CbC reports filed after March 30, 2018.
National Security Contractors
A specified national security contractor may complete Form 8975, Country-by-Country Report and Schedules A (Form 8975). The taxpayer may identify itself as a specified national security contractor on Form 8975. In addition, the taxpayer will complete Schedule A (Form 8975) for the Tax Jurisdiction of the United States with the aggregated financial and employee information for the entire U.S. MNE group in Part I, Tax Jurisdiction Information. However, the taxpayer will use only the ultimate parent entity’s information in Part II, Constituent Entity Information. The taxpayer will complete another Schedule A (Form 8975) with the word “Stateless” and zeroes in Part I and include only the ultimate parent entity’s information in Part II. No other Schedules A (Form 8975) or additional information is required.
Further, a specified national security contractor that has already filed Form 8975 and Schedules A (Form 8975) for a prior reporting period may file an amended return and attach an amended Form 8975 and Schedules A (Form 8975). To prevent the original CbC reports from being exchanged, the amended forms should be filed by April 20, 2018, if filing on paper, or May 25, 2018, if filing electronically.