Form 4876-A

Unfolding Form 4876-A 

Form 4876 A, known as "Election To Be Treated as an Interest Charge DISC", holds significant value for business entities planning to operate as an Interest Charge Domestic International Sales Corporation (IC-DISC). IC-DISC offers an exciting avenue for companies, allowing them the opportunity to get a deduction on export profits.

Criteria to use IRS form 4876-A

Businesses must understand whether they qualify for this election or not. The taxpayer must meet specific requirements. First, the company must have only one class of stock, and the value of its qualified export assets must equal or exceed 95 percent of the total gross value of its assets. Secondly, it must procure 95 percent of its gross receipts from qualified export receipts.

How to Fill Out IRS Form 4876 A

The process of filling out the form 4876-A may seem daunting to some, but by breaking down its parts, understanding each section, and presenting it in a simplified manner:

1. Start by completing form 4876-A’s top section; input the name of your business entity in the "Name of Employer" field.
2. Progress to the address, including the Zip code, field, and input the exact address of your business, making sure to include the zip code.
3. Following this, fill out the next field by entering your business's Employer Identification Number (EIN) as issued by the IRS.
4. Next, fill in the field with the name of the individual responsible for questions regarding the form.
5. Continue to the "Telephone Number" field and furnish the contact person's telephone number.
6. Next, proceed to the "Date Business Established” section. Enter the date your business entity was established.
7. After that, pay attention to the "Type of Business Activity Conducted" field. This requires a brief description of the practical operations of your business.
8. For the "Reasonable Cause for Failure to Timely Deposit Taxes" section, provide a comprehensive, justifiable explanation for your inability to promptly deposit your employment taxes. Ensure it conveys the honest intensity or uniqueness of the situation that prevented the prompt payment.
9. Next, move on to Part II, where you'll find the “Shareholder’s Consent Statement”. Here, each shareholder should provide their consent and signature for the election to be valid. If there isn't enough room for each shareholder to sign, you may attach separate consent forms to Form 4876-A.

Timing and submission

Prepare your Form 4876-A during two distinct periods, depending on if it's the corporation's first tax year or not. If it is the corporation's first tax year, complete and file form 4876-A within 90 days after the start of the tax year. However, for any tax year that is not the corporation's first tax year, the election must be made during the 90-day period immediately preceding the first day of that tax year. It's vital to note these timings to avoid any late submission penalties.