THE SOUTH LAGS IN REALIZING EXPORT TAX BENEFITS

ONE TAX INCENTIVE THAT THE CLINTON ADMINISTRATION IS EXPECTED TO CONTINUE TO SUPPORT IS THE FOREIGN SALES CORPORATION (FSC), WHICH IS GENERALLY  REGARDED AS THE OFFICIAL EXPORT TAX INCENTIVE PROGRAM OF THE U.S. GOVERNMENT AND A RESPONSE TO EXPORT SUBSIDY PROGRAMS OF THE U.S.’S GLOBAL COMPETITORS.

BUT BECAUSE THE FSC PROGRAM IS OFTEN CONSIDERED DIFFICULT TO UNDERSTAND AND A PROGRAM DESIGNED FOR MAJOR CORPORATIONS ONLY, MANY MIDDLE-MARKET EXPORTERS ARE MISSING OUT ON A TAX SUBSIDY THAT COULD SAVE THEM TENS OF THOUSANDS OF DOLLARS A YEAR.

MAXIMIZING FSC TAX BENEFITS, A TWO-DAY SEMINAR SCHEDULED FOR JUNE 14-15 AT THE SWISSOTEL ATLANTA, WILL FOCUS ON JUST THIS ISSUE – AND MAKE IT UNDERSTANDABLE.  THE PROGRAM WILL ADDRESS THE REQUIREMENTS OF ENTRY-LEVEL ATTENDEES AS WELL AS MORE EXPERIENCED FSC PRACTITIONERS LOOKING FOR A MORE IN-DEPTH, TECHNICAL ANALYSIS OF THE FSC STATUTE AND REGULATIONS, SAID BILL SETO OF ERNST & YOUNG, WHO IS SERVING AS CHAIRMAN OF THE ATLANTA SEMINAR, SPONSORED BY THE FSC/DISC TAX ASSOCIATION (FDTA).

ALMOST ANY AMERICAN COMPANY WITH OVERSEAS PROFITS OF $1 MILLION OR MORE ON THE SALE OR LEASE OF U.S. MANUFACTURED GOODS SHOULD TAKE A CLOSE LOOK AT STARTING AN FSC, SAID MR. SETO.  WE’RE LOOKING AT A 5 PERCENT PERMANENT TAX BENEFIT SO IF YOU’RE MAKING $1 MILLION THAT’S A $50,000 TAX SAVINGS OR REDUCTION.  IF YOU’RE MAKING HALF THAT, YOU’RE CUTTING TAXES BY $25,000.  START-UP COSTS DON’T COME CHEAP, HE ADDED, AND THERE ARE ALSO ONGOING COSTS BUT IF ONE ANTICIPATES CONTINUED GROWTH OF PROFITS APPROACHING THE $1 MILLION MARK, IT’S WORTH LOOKING AT.

FOR SMALLER COMPANIES, THE U.S. GOVERNMENT HAS ATTEMPTED TO MAKE FSCS MORE AFFORDABLE BY THE CREATION OF SMALL AND SHARED FSCS.  THE SEMINAR ALSO WILL ADDRESS THE PROS AND CONS OF THESE OPTIONS.

ACCORDING TO THE FDTA, MORE THAN 5,000 COMPANIES HAVE FORMED FSCS FOR BOTH SALES OF AND LEASES OF U.S. EXPORT PROPERTY AND NEW FSCS. HERE IN THE SOUTHEAST, HOWEVER, MR. SETO NOTED THAT FSCS HAVE NOT BEEN AS NUMEROUS AS IN THE REST OF THE COUNTRY.

THE SOUTH HAS BEEN FURTHER BEHIND, HE SAID. HISTORICALLY, WE’RE NOT A  MANUFACTURING AREA.  HOWEVER, IN THE NEAR FUTURE, PARTICULARLY IN GEORGIA WHERE THERE HAS BEEN SIGNIFICANT DEVELOPMENT IN THE HIGH TECH AREA, WE’LL BE SEEING INCREASED EXPORTING AND FSCS WILL BE FEASIBLE FOR MORE COMPANIES.

IF TAXES GO UP, AS IS ANTICIPATED, MR. SETO SAID THAT THE AMOUNT OF A COMPANY’S ACTUAL EXEMPTION WILL GO UP AS WELL.  EXPORTS ARE DEFINITELY IN LINE WITH CLINTON’S EMPHASIS ON GROWING JOBS SO I THINK WE’LL DEFINITELY SEE CONTINUED PROTECTION FOR AND GROWTH OF FSCS.

OTHER PARTICIPANTS ON THE PROGRAM FROM ATLANTA INCLUDE: PATRICIA M. GHERTNER, ARTHUR ANDERSEN; MICHAEL HORTEN, KING & SPALDING; PHILIP J. MARZETTI, PAUL, HASTINGS, JANOFSKY & WALKER; AND JEFF ULBRIGHT, DELOITTE & TOUCHE.

FOR MORE INFORMATION CALL: NATALIE BOCIAN, FDTA, (914) 694-1065.