Foreign Trade Zone Tax Credit

[tammystax]

I have had several calls from clients that work in the United States for a Foreign owned company (like Nissan) and they have friends and co-workers that are filing amended returns on a "Foreign Tax Credit" and receiving several $$$$ in refunds. The only information that I've collected through the many conversations with these clients is, this is a new credit passed under obamacare, it is a credit for working for a foreign owned company, it is dealing with the foreign trade zone tax credit. I have researched all summer and only come up with information pertaining to individuals living abroad or credits to the Company, not the employees.

Has anyone heard about this Foreign Trade Zone Tax Credit or Foreign Tax Credit for individuals working for foreign owned companies in the U.S.?

[Snaggletooth]

Yes, Very Misleading

Tammy, I live between 3 Nissan facilities, a plant in Smyrna TN, another plant in Decherd, TN, and their North American Headquarters in Franklin, TN.

This fall, I got a phone call from one of my clients at the Decherd plant, telling me there are signs in the plant that say this is a "Foreign Enterprise Zone" or something similar. And that several employees were filing amended returns and getting big money back. Thousands of dollars in many cases. He asked for my opinion.

I told him I wasn't aware of any such exemption of income. A couple weeks later, I was listening to a "talk taxes" radio show out of Nashville where someone called in with the same question. At issue is the foreign income exclusion, now up over $100,000.

Before the show was over someone called in from Nissan, stating that the "Foreign Enterprise Zone" posters had nothing to do with tax-free income. If an IRS agent was listening, he(she) could have data mined these returns and had a field day disallowing these refunds.

[tammystax]

Thank you for the response. I think I've compiled all the info that I need. Unfortunately I may lose some clients that will be insistent on filing with this "foreign credit or deduction" but I'm going to stick by my long time motto....."Don't prepare something that you don't know how to explain to the IRS agent, if or when the client gets audited"!!!!!!!