U.S. antiboycott laws deter U.S. persons from complying with other countries’ boycott and sanctions programs.
Our attorneys have evaluated thousands of potential boycott requests for companies in the high-risk energy, manufacturing, and financial services industries. This makes us among the most experienced antiboycott attorneys in the country. We can assist with any inquiry you have.
Wardlaw Trade Law can help you understand:
Big project? No problem. Where needed, we can also work with partners to audit your transactions, calculate loss of tax benefits (for IRS violations), run your antiboycott compliance program, and respond to a government subpoena or investigation.
Let us think about your antiboycott issue through a holistic lens.
U.S. antiboycott regulations are a form of blocking statute. They introduce a conflict of laws between U.S. trade laws and the laws of boycotting countries. We see similar conflicts between U.S. and Chinese trade laws and U.S., EU, and Canada sanctions on Cuba. Let us help you think through how to meet your obligations across countries.
Need to learn more about U.S. anttiboycott laws before you get started?
U.S. antiboycott laws are administered through two sets of regulations: One from the Department of Commerce (through the Office of Antiboycott Compliance (“OAC”), within the Bureau of Industry and Security) and the Department of Treasury (through the Internal Revenue Service (“IRS”)).
The OAC regulations are contained within the U.S. Export Administration Regulations. They prohibit a U.S. person’s participation or agreement to participate in an unapproved foreign boycott, with a focus on boycotts that are nationally-mandated (historically focusing on boycotts of Israel by countries in the Arab League, but covering other boycotts too), rather than on boycotts put on by individual protestors, regions, U.S. states, or non-state actors (like boycotts spearheaded by unhappy citizens of other countries or by a company’s customers).
The regulations administered by the IRS are contained within the U.S. tax code, with important clarifications published in Q&A format in “Guidelines” in the Federal Register. The IRS regulations “penalize” a U.S. taxpayer’s agreement to participate in the same kinds of boycotts by revoking a taxpayer’s eligibility for certain high-value tax credits.
Like boycott participation, boycott-related discrimination (i.e., against boycotted country nationals, or against people that have traits that may affiliate them with the boycotted country, such as their race, religion, nationality, or the fraternal or charitable groups they participate in) is disincentivized by both regulators.
The regulations have a similar goal but are not identical, creating potential traps for compliance teams that are less fluent with both sets of requirements.
One important distinction is that while both agencies require taxpayers to report on the boycott requests they receive, and on how they have responded to those requests, they have different reporting requirements. OAC expects quarterly reports of the boycott requests a U.S. person has received and of related responses. The IRS expects corporate taxpayers to include a report of their operations in boycotting countries, any boycott requests they have received, and their response in their annual tax returns.
In addition, there are some kinds of boycott language prohibited by OAC but not penalized by the IRS, and vice-versa, or that are reportable despite not being prohibited or penalizable.
Need help sorting out what is prohibited, penalizable, and reportable? We can help.
Let’s build a sustainable trade compliance framework aligned with your operations.
