- Office of Antiboycott Compliance
Washington, DC
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- Antiboycott Laws:
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- 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).
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- Objectives:
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- 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.
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- Primary Impact:
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- 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.
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- Who Is Covered by the Laws?
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- The antiboycott provisions of the Export Administration
Regulations (EAR) apply to all "U.S. persons," defined to include
individuals and companies located in the United States and their foreign
affiliates. These persons are subject to the law when their activities
relate to the sale, purchase, or transfer of goods or services (including
information) within the United States or between the U.S. and a foreign
country. This covers U.S. exports and imports, financing, forwarding and
shipping, and certain other transactions that may take place wholly
offshore.
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- Generally, the TRA applies to all U.S. taxpayers (and
their related companies). The TRA's reporting requirements apply to
taxpayers'
"operations" in, with, or related to boycotting countries or
their nationals. Its penalties apply to those taxpayers with foreign tax
credit, foreign subsidiary deferral, FSC (Foreign Sales Corporation), and
IC-DISC (Interest Charge-Domestic International Sales Corporation)
benefits.
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- What do the Laws Prohibit?
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- Conduct that may be penalized under the TRA and/or
prohibited
under the EAR includes:
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- Agreements to refuse or actual refusal to do business
with or in Israel or with blacklisted companies.
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- Agreements to discriminate or actual discrimination
against
other persons based on race, religion, sex, national origin or
nationality.
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- Agreements to furnish or actual furnishing of information
about business relationships with or in Israel or with blacklisted
companies.
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- Agreements to furnish or actual furnishing of information
about the race, religion, sex, or national origin of another person.
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- Implementing letters of credit containing prohibited
boycott terms or conditions.
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- The TRA does not "prohibit" conduct, but denies
tax benefits ("penalizes") for certain types of boycott-related
agreements.
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- What Must Be Reported?
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- 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.
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- 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."
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- How To Report:
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- EAR reports are filed quarterly on form BIS 621-P for
single requests or BIS 6051-P for multiple requests available from the
Department of Commerce,s Office of Antiboycott Compliance (OAC) in
Washington,
D.C. To obtain these forms, telephone OAC,s Reports Processing Unit at
(202) 482-2448. TRA reports are filed with tax returns on IRS Form 5713.
This form is available from local IRS offices.
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- Penalties:
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- The EAR prescribe the penalties for violations of the
Antiboycott Regulations as well as export control violations. These can
include:
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- Criminal:
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- 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.
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- Administrative:
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- For each violation of the EAR any or all of the following
may be imposed:
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- General denial of export privileges;
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- The imposition of fines of up to $12,000 per violation;
and/or
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- Exclusion from practice.
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- Boycott agreements under the TRA involve the denial of
all or part of the foreign tax benefits discussed above.
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- The $10,000 maximum per violation specified in the EAA
is adjusted periodically pursuant to law for inflation.
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- The maximum civil penalty for any violation committed
from October 23, 1996 through November 1, 2000 is $11,000 per
violation.
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- The maximum civil penalty for any violation committed
after November 1, 2000 is $12,000 per violation.
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- Where to Get More Information:
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- U.S. Department of Commerce BIS/Office of Antiboycott
Compliance, Room 6098 Washington, D.C. 20230 (202) 482-2381 or by
E-Mail
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- http://www.bxa.doc.gov/AntiboycottCompliance/OACRequirements.html
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