Antiboycott Compliance Requirements
U.S. companies continue to report receiving requests to engage in activities that further or support the boycott of Israel. U.S. companies may receive similar requests in the future. If you have questions, please call the Office of Antiboycott Compliance (OAC) at (202) 482-2381 and ask for the Duty Officer or you may contact them via email.
During the mid-1970's the United States adopted two laws that seek to counteract the participation of U.S. citizens in other nation's economic boycotts or embargoes. These "antiboycott" laws are the 1977 amendments to the Export Administration Act (EAA) and the Ribicoff Amendment to the 1976 Tax Reform Act (TRA). While these laws share a common purpose, there are distinctions in their administration.
The antiboycott laws were adopted to encourage, and in specified cases, require U.S. firms to refuse to participate in foreign boycotts that the United States does not sanction. They have the effect of preventing U.S. firms from being used to implement foreign policies of other nations which run counter to U.S. policy.
The Arab League boycott of Israel is the principal foreign economic boycott that U.S. companies must be concerned with today. The antiboycott laws, however, apply to all boycotts imposed by foreign countries that are unsanctioned by the United States.
On January 27, 2016, the U.S. Department of the Treasury published its current list of boycotting countries, which are as follows:
Iraq - examples of Iraq Boycott-Related Requests
Kuwait - examples of Kuwait Boycott-Related Requests
Lebanon - examples of Lebanon Boycott-Related Requests
Libya - examples of Libya Boycott-Related Requests
Qatar - examples of Qatar Boycott-Related Requests
Saudi Arabia - examples of Saudi Arabia Boycott-Related Requests
Syria - examples of Syria Boycott-Related Requests
United Arab Emirates - examples of UAE Boycott-Related Requests
Yemen - examples of Yemen Boycott-Related Requests
Who Is Covered by the Laws?
The antiboycott provisions of the Export Administration Regulations (EAR) apply to the activities of U.S. persons in the interstate or foreign commerce of the United States. The term "U.S. person" includes all individuals, corporations and unincorporated associations resident in the United States, including the permanent domestic affiliates of foreign concerns. U.S. persons also include U.S. citizens abroad (except when they reside abroad and are employed by non-U.S. persons) and the controlled in fact affiliates of domestic concerns. The test for "controlled in fact" is the ability to establish the general policies or to control the day to day operations of the foreign affiliate.
The scope of the EAR, as defined by Section 8 of the EAA, is limited to actions taken with intent to comply with, further, or support an unsanctioned foreign boycott.
What do the Laws Prohibit?
Conduct that may be penalized under the TRA and/or prohibited under the EAR includes:
Agreements to refuse or actual refusal to do business with or in Israel or with blacklisted companies.
Agreements to discriminate or actual discrimination against other persons based on race, religion, sex, national origin or nationality.
Agreements to furnish or actual furnishing of information about business relationships with or in Israel or with blacklisted companies.
Agreements to furnish or actual furnishing of information about the race, religion, sex, or national origin of another person.
Implementing letters of credit containing prohibited boycott terms or conditions.
The TRA does not "prohibit" conduct, but denies tax benefits ("penalizes") for certain types of boycott-related agreements.
What Must Be Reported?
The EAR requires U.S. persons to report quarterly requests they have received to take certain actions to comply with, further, or support an unsanctioned foreign boycott.
The TRA requires taxpayers to report "operations" in, with, or related to a boycotting country or its nationals and requests received to participate in or cooperate with an international boycott. The Treasury Department publishes a quarterly list of "boycotting countries."
How To Report:
The EAR requires reports of receipts of boycott requests to be filed quarterly. Reports may be filed electronically or by mail on form BIS 621-P for single transactions or BIS 6051P for multiple transactions involving boycott requests received in the same calendar quarter.
Forms for both electronic transmission and/or mail submission may be accessed from the forms request page. Paper/carbon paper forms may be obtained by request to the Office of Antiboycott Compliance/Report Processing Unit at (202) 482-2448.
TRA reports are filed with tax returns on IRS Form 5713. This form is available on PDF from local IRS offices.
The Export Administration Act (EAA) specifies penalties for violations of Antiboycott Regulations as well as export control violations. These can include:
The penalties imposed for each "knowing" violation can be a fine of up to $50,000 or five times the value of the exports involved, whichever is greater, and imprisonment of up to five years. During periods when the EAR are continued in effect by an Executive Order issued pursuant to the International Emergency Economic Powers Act, the criminal penalties for each "willful" violation can be a fine of up to $50,000 and imprisonment for up to ten years.
For each violation of the EAR any or all of the following may be imposed:
General denial of export privileges;
The imposition of fines of up to $11,000USD per violation; and/or
Exclusion from practice.
Boycott agreements under the TRA involve the denial of all or part of the foreign tax benefits discussed above.
When the EAA is in lapse, penalties for violation of the Antiboycott Regulations are governed by the International Emergency Economic Powers Act (IEEPA). The IEEPA Enhancement Act provides for penalties of up to the greater of $250,000 per violation or twice the value of the transaction for administrative violations of Antiboycott Regulations, and up to $1 million and 20 years imprisonment per violation for criminal antiboycott violations.
Voluntary Self Disclosure (VSD) of violations of the antiboycott provisions of EAR is provided for in Part 764.8 of the Regulations. If you believe you may have violated the antiboycott provisions BIS urges you to disclose to the Office of Antiboycott Compliance (OAC) via the procedures described in Part 764.8. These procedures include: timing of the disclosure, requisites for initial notification, nature of the narrative account of the violation, documentation, and certification.
After receipt of the appropriate narrative and supporting documentation, OAC will give the disclosing party written notification of receipt of the disclosure. Following thorough review and any necessary investigation by OAC, BIS will inform the party making the disclosure of any action it intends to take. The criteria BIS uses in determining whether to pursue an enforcement action and what sanctions it will recommend are described in Supplement 2 of part 766. As indicated in Supplement 2, BIS encourages VSDs by giving the disclosing party "great weight" in the assessment of penalties. This may provide significant reduction in administrative penalties.
Voluntary self-disclosures of antiboycott violations shall be submitted to:
Office of Antiboycott Compliance
1401 Constitution Avenue, NW
Washington, DC 20230
Tel: (202) 482-2381
Fax: (202) 482-0913
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