PRIA, Government Policy, Made Personal

Summary

You must tell the IRS if you or your business has operations in a country on the IRS boycott list or in a country where doing business may require joining or helping an international boycott. If you are a U.S. shareholder of a foreign corporation, you must report for that corporation. The report must say whether you or your related companies took part in, helped, or were asked to help a boycott during the tax year, and describe the business activity involved. The IRS will keep and publish the list of countries at least every three months. Helping or joining a boycott means agreeing to refuse to do business with a boycotted country, with U.S. companies trading there, with companies run by people of a certain nationality, race, or religion, or to refuse to hire people for those reasons. It also includes refusing to ship or insure goods using carriers that do not support the boycott. You do not have to report agreements that U.S. law requires, or rules that ban importing or exporting certain goods. If you do help a boycott, your operations in those countries are treated as involved unless you can clearly show a specific operation was separate and did not help the boycott. You can ask the IRS to decide if a particular operation counts, even before it starts. If a person controls a company, the person and the company are treated as having the same boycott actions. If you willfully fail to report, you can be fined up to $25,000, jailed up to one year, or both, in addition to other penalties.

Title 26, §999

Internal Revenue Code, Source: USLM XML via OLRC

(a)International boycott reports by taxpayers

(1)Report required

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,

that person or shareholder (within the meaning of section 951(b)) shall report such operations to the Secretary at such time and in such manner as the Secretary prescribes, except that in the case of a foreign corporation such report shall be required only of a United States shareholder (within the meaning of such section) of such corporation.

(2)Participation and cooperation; request therefor (3) List to be maintained

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).

(b)Participation in or cooperation with an international boycott

(1)General rule

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)Special rule

(A)Nonboycott operations

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)Separate and identifiable operations

A taxpayer may show that different operations within the same country, or operations in different countries, are clearly separate and identifiable operations.

(3)Definition of boycott participation and cooperation

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)Compliance with certain laws

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)International boycott factor (d) Determination with respect to particular operations

(1)International boycott factor (2) Specifically attributable taxes and income

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.

(3)World-wide operations

For purposes of this subsection, the term “world-wide operations” means operations in or related to countries other than the United States.

(e)Participation or cooperation by related persons

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)Willful failure to report

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.

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.

§999 Reports by Taxpayers; Determinations

Summary

Title 26, §999

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

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Amendments

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