Title 26 — Internal Revenue CodeRelease 119-73
§999 Reports by taxpayers; determinations
Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter N— - Tax Based on Income From Sources Within or Without the United States › Part PART V— - INTERNATIONAL BOYCOTT DETERMINATIONS › § 999
Summary
You must tell the IRS if you, a foreign company you partly own, or any related company joined, helped, or were asked to join an international boycott during the tax year. The IRS keeps a list of countries that may force boycott behavior and updates it at least every three months. If you did take part, all of your business in that country — and in other countries that require the boycott to do business there — is treated as connected to the boycott unless you can clearly show a specific operation was separate and did not join the boycott. “Joining or helping” includes agreeing to refuse business with a boycotted country or with U.S. firms dealing there, refusing to hire or do business with people of certain nationalities, races, or religions, or refusing to ship or insure goods except on carriers that also follow the boycott. The rule does not apply when you must follow U.S. law, presidential orders, or foreign import-export bans. The IRS uses a formula to limit some tax credits and reportable foreign income when boycotts are involved, but you can instead show which operations and taxes are tied to the boycott. You can ask the IRS to decide if an operation counts, even before you start. If you control a company, the law treats your actions and the company’s actions as the same. Willfully failing to report can bring up to $25,000 in fines, up to one year in jail, or both.
Full Legal Text
Title 26, §999
Internal Revenue Code — Source: USLM XML via OLRC
(a)(1)If any person, or a member of a controlled group (within the meaning of section 993(a)(3)) which includes that person, has operations in, or related to—
(A)a country (or with the government, a company, or a national of a country) which is on the list maintained by the Secretary under paragraph (3), or
(B)any other country (or with the government, a company, or a national of that country) in which such person or such member had operations during the taxable year if such person (or, if such person is a foreign corporation, any United States shareholder of that corporation) knows or has reason to know that participation in or co-operation with an international boycott is required as a condition of doing business within such country or with such government, company, or national,
(2)A taxpayer shall report whether he, a foreign corporation of which he is a United States shareholder, or any member of a controlled group which includes the taxpayer or such foreign corporation has participated in or cooperated with an international boycott at any time during the taxable year, or has been requested to participate in or cooperate with such a boycott, and, if so, the nature of any operation in connection with which there was participation in or cooperation with such boycott (or there was a request to participate or cooperate).
(3)The Secretary shall maintain and publish not less frequently than quarterly a current list of countries which require or may require participation in or cooperation with an international boycott (within the meaning of subsection (b)(3)).
(b)(1)If the person or a member of a controlled group (within the meaning of section 993(a)(3)) which includes the person participates in or cooperates with an international boycott in the taxable year, all operations of the taxpayer or such group in that country and in any other country which requires participation in or cooperation with the boycott as a condition of doing business within that country, or with the government, a company, or a national of that country, shall be treated as operations in connection with which such participation or cooperation occurred, except to the extent that the person can clearly demonstrate that a particular operation is a clearly separate and identifiable operation in connection with which there was no participation in or cooperation with an international boycott.
(2)(A)A clearly separate and identifiable operation of a person, or of a member of the controlled group (within the meaning of section 993(a)(3)) which includes that person, in or related to any country within the group of countries referred to in paragraph (1) shall not be treated as an operation in or related to a group of countries associated in carrying out an international boycott if the person can clearly demonstrate that he, or that such member, did not participate in or cooperate with the international boycott in connection with that operation.
(B)A taxpayer may show that different operations within the same country, or operations in different countries, are clearly separate and identifiable operations.
(3)For purposes of this section, a person participates in or cooperates with an international boycott if he agrees—
(A)as a condition of doing business directly or indirectly within a country or with the government, a company, or a national of a country—
(i)to refrain from doing business with or in a country which is the object of the boycott or with the government, companies, or nationals of that country;
(ii)to refrain from doing business with any United States person engaged in trade in a country which is the object of the boycott or with the government, companies, or nationals of that country;
(iii)to refrain from doing business with any company whose ownership or management is made up, all or in part, of individuals of a particular nationality, race, or religion, or to remove (or refrain from selecting) corporate directors who are individuals of a particular nationality, race, or religion; or
(iv)to refrain from employing individuals of a particular nationality, race, or religion; or
(B)as a condition of the sale of a product to the government, a company, or a national of a country, to refrain from shipping or insuring that product on a carrier owned, leased, or operated by a person who does not participate in or cooperate with an international boycott (within the meaning of subparagraph (A)).
(4)This section shall not apply to any agreement by a person (or such member)—
(A)to meet requirements imposed by a foreign country with respect to an international boycott if United States law or regulations, or an Executive Order, sanctions participation in, or cooperation with, that international boycott,
(B)to comply with a prohibition on the importation of goods produced in whole or in part in any country which is the object of an international boycott, or
(C)to comply with a prohibition imposed by a country on the exportation of products obtained in such country to any country which is the object of an international boycott.
(c)(1)For purposes of section 908(a), 952(a)(3), and 995(b)(1)(F)(ii), the international boycott factor is a fraction, determined under regulations prescribed by the Secretary, the numerator of which reflects the world-wide operations of a person (or, in the case of a controlled group (within the meaning of section 993(a)(3)) which includes that person, of the group) which are operations in or related to a group of countries associated in carrying out an international boycott in or with which that person or a member of that controlled group has participated or cooperated in the taxable year, and the denominator of which reflects the world-wide operations of that person or group.
(2)If the taxpayer clearly demonstrates that the foreign taxes paid and income earned for the taxable year are attributable to specific operations, then, in lieu of applying the international boycott factor for such taxable year, the amount of the credit disallowed under section 908(a), the addition to subpart F income under section 952(a)(3), and the amount of deemed distribution under section 995(b)(1)(F)(ii) for the taxable year, if any, shall be the amount specifically attributable to the operations in which there was participation in or cooperation with an international boycott under section 999(b)(1).
(3)For purposes of this subsection, the term “world-wide operations” means operations in or related to countries other than the United States.
(d)Upon a request made by the taxpayer, the Secretary shall issue a determination with respect to whether a particular operation of a person, or of a member of a controlled group which includes that person, constitutes participation in or cooperation with an international boycott. The Secretary may issue such a determination in advance of such operation in cases which are of such a nature that an advance determination is possible and appropriate under the circumstances. If the request is made before the operation is commenced, or before the end of a taxable year in which the operation is carried out, the Secretary may decline to issue such a determination before close of the taxable year.
(e)If a person controls (within the meaning of section 304(c)) a corporation—
(1)participation in or cooperation with an international boycott by such corporation shall be presumed to be such participation or cooperation by such person, and
(2)participation in or cooperation with such a boycott by such person shall be presumed to be such participation or cooperation by such corporation.
(f)Any person (within the meaning of section 6671(b)) required to report under this section who willfully fails to make such report shall, in addition to other penalties provided by law, be fined not more than $25,000, imprisoned for not more than one year, or both.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2004—Subsec. (c)(1). Pub. L. 108–357 struck out “941(a)(5),” after “section 908(a),”. 2000—Subsec. (c)(1). Pub. L. 106–519 inserted “941(a)(5),” after “908(a),”. 1986—Subsec. (c)(1), (2). Pub. L. 99–514 repealed section 802(c)(3) of Pub. L. 98–369 thereby restoring former text. See 1984 Amendment note below. 1984—Subsec. (c)(1), (2). Pub. L. 98–369 which substituted “995(b)(1)(F)(i)” for “995(b)(1)(F)(ii)” wherever appearing was repealed. See 1986 Amendment note above. 1978—Subsec. (c)(1). Pub. L. 95–600, § 703(h)(2), substituted “995(b)(1)(F)(ii)” for “995(b)(3)”. Subsec. (c)(2). Pub. L. 95–600, § 703(h)(3), substituted “995(b)(1)(F)(ii)” for “995(b)(1)(D)(ii)”.
Statutory Notes and Related Subsidiaries
Effective Date
of 2004 AmendmentAmendment by Pub. L. 108–357 applicable to transactions after Dec. 31, 2004, see section 101(c) of Pub. L. 108–357, set out as a note under section 56 of this title.
Effective Date
of 2000 AmendmentAmendment by Pub. L. 106–519 applicable to transactions after Sept. 30, 2000, with special rules relating to existing foreign sales corporations, see section 5 of Pub. L. 106–519, set out as a note under section 56 of this title.
Effective Date
of 1986 AmendmentAmendment by Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.
Effective Date
of 1984 AmendmentAmendment by Pub. L. 98–369 applicable to transactions after Dec. 31, 1984, in taxable years ending after such date, see section 805(a)(1) of Pub. L. 98–369, as amended, set out as a note under section 245 of this title.
Effective Date
of 1978 AmendmentAmendment by Pub. L. 95–600 effective on Oct. 4, 1976, see section 703(r) of Pub. L. 95–600, set out as a note under section 46 of this title.
Effective Date
Section applicable to participation in or cooperation with an international boycott more than 30 days after Oct. 4, 1976, with special provisions for existing contracts, see section 1066(a) of Pub. L. 94–455, set out as an
Effective Date
of 1976 Amendment note under section 908 of this title. Plan
Amendments
Not Required Until January 1, 1989For provisions directing that if any
Amendments
made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title. Reports by the Secretary Pub. L. 94–455, title X, § 1067, Oct. 4, 1976, 90 Stat. 1654, as amended by Pub. L. 98–369, div. A, title IV, § 441(c),
July 18, 1984, 98 Stat. 815, which required the Secretary to transmit a report every four years to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate relating to reports filed under section 999(a) of this title and describing the administration of provisions relating to international boycott activity, terminated, effective
May 15, 2000, pursuant to section 3003 of Pub. L. 104–66, as amended, set out as a note under section 1113 of Title 31, Money and Finance. See, also, page 141 of House Document No. 103–7.
Reference
Citations & Metadata
Citation
26 U.S.C. § 999
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73