IR-2017-212, Dec. 29, 2017 WASHINGTON -- The Treasury Department and the Internal Revenue Service today issued Notice 2018-07, which provides guidance for computing the “transition tax” under recent tax legislation enacted on Dec. 22, 2017. In general, newly enacted section 965 of the Internal Revenue Code imposes a transition tax on untaxed foreign earnings of foreign subsidiaries of U.S. companies by deeming those earnings to be repatriated. Foreign earnings held in the form of cash and cash equivalents are taxed at a 15.5 percent rate, and the remaining earnings are taxed at an 8 percent rate. The transition tax generally may be paid in installments over an eight-year period. Notice 2018-07 describes regulations that the Treasury Department and the IRS intend to issue, including rules for determining the amount of cash and cash equivalents for purposes of applying the 15.5 percent rate and rules for determining the amount of foreign earnings subject to the transition tax. These rules will assist taxpayers by providing certain additional information needed for computing their transition tax. Notice 2018-07 requests comments on the rules described in the notice and also requests comments on what additional guidance should be issued to assist taxpayers in computing the transition tax. The Treasury Department and the IRS expect to issue additional guidance in the future. Notice 2018-07 will be published in IRB 2018-04 on Jan. 22, 2018. The Treasury media contact for this matter is Marisol Garibay, Deputy Assistant Secretary for Public Affairs, 202-622-6490.