Why is foreign tax credit allowed?
March 25, 2014
IRS re-determination of tax liability
March 25, 2014
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Statute of limitations longer when tax paid and tax accrued

Often times the amount of tax a U.S. taxpayer actually pays is not the same as the amount he accrued. When the taxes that actually paid to the foreign country differ from the amounts accrued, IRC § 905(c) requires that the taxpayer notify the IRS, so it can re-determine the proper tax liability. That Section also requires the taxpayer to notify the IRS if any tax that is actually paid and credited is refunded back to the taxpayer. After the redetermination is made, and the taxpayer is required to make additional payments, the usual three years statute of limitations period of an assessment does not apply. See IRC § 905(c)(3) and § 6501(c)(5).