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  • Elizabeth A. McMorrow

Are You Subject to Anti-Boycott Reporting?

Certain individuals and companies are required to report to the U.S. Internal Revenue Service (IRS) boycott requests and operations in boycott countries. Failure to report can result in administrative and/or criminal penalties. The U.S. boycott reporting regime extends beyond U.S. borders and can include foreign organizations.

What Does the U.S. Mean by Boycott?

A relevant boycott involves entering into an agreement as a condition of doing business in a country where the agreement requires a person to refrain from:

  • doing business in or hiring employees from another country or

  • doing business with other persons that do business in or hire employees from the other country.

Boycotts in this context do not include those boycotts sanctioned by the U.S.

Boycott Levels

The IRS reporting requirement extends to three levels of boycotting:

  • Primary: This type of boycott is imposed by a country on individuals, entities, property and transactions in the targeted country.

  • Secondary: This level of boycott extends the boycott beyond the targeted country to blacklisted persons (i.e., those doing business with the boycotted country’s government or one of its companies or nationals).

  • Tertiary: This is the most attenuated boycott level. It extends the boycott to countries or individuals doing business with the blacklisted persons affected by the secondary boycott.

Examples of Boycott Agreement Requests

Boycott requests can range from blatant to subtle. There is no cookie cutter approach taken by those trying to get you and/or your company to agree to engage in a boycott. You should be alert to the below types of requests:

  • Agreements to refuse or actual refusal to do business with or in Israel or with blacklisted companies.

  • Agreements to furnish or actual furnishing of information about business relationships 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 the race, religion, sex, or national origin of another person.

  • Implementing letters of credit containing prohibited boycott terms or conditions.

Who Is Covered by the U.S. Antiboycott Laws?

It is necessary to review your structure to determine which individuals or organizations may be covered by the U.S. antiboycott laws. Coverage includes U.S. corporations, individuals, partnerships and trusts. The antiboycott regime also includes certain foreign corporations, individuals, partnerships and trusts.

The reporting regime requires more than just the reporting of boycott requests. It also includes reporting (among other things) the existence of operations in countries implementing an international boycott.

The U.S. most recently published list of countries that require or may require participation in, or cooperation with, an international boycott includes the following jurisdictions:


Violations of the U.S. antiboycotting program can result in administrative and/or criminal penalties.

If there is a criminal judgement then each knowing offense can result in 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.

Administrative penalties can result in:

  • a general denial of export privileges;

  • the imposition of fines of up to $11,000 per violation; and/or

  • denial of all or part of certain foreign tax benefits.


Boycott requests must be reported quarterly. Boycott requests and the existence of operations in boycott countries must be reported annually.

If you believe you may have violated the antiboycott provisions, the Office of Antiboycott Compliance has a process of self-disclosure.

For assistance, please contact me via my contact page or at

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