Doing Business Abroad, International Boycotts, & IRC 999 Compliance Requirements
As the U.S. tax filing season approaches, U.S. taxpayers should consider whether they must file IRS Form 5713, International Boycott Report. In general, a U.S. taxpayer must file an IRS Form 5713 when any of the three below situations are present:
- When the U.S. taxpayer does business in, or has business operations related to, a country on the Boycott Country List during the year
- When the U.S. taxpayer does business in, or has business operations related to, any other country and the U.S. taxpayer knows or has reason to know that participation in, or cooperation with, an international boycott is required as a condition of doing business within that other country
- When the U.S. taxpayer does business with, or has business operations related to, a government, a company, or a national of a country on the Boycott Country List
Form 5713 is used to report operations in or related to a boycotting country, the receipt of boycott requests, and any boycott agreements made.
Every quarter the U.S. Treasury Secretary publishes the Boycott Country List. The Boycott Country List discloses countries that require, or may require, participation in—or cooperation with—an international boycott. According to the last U.S. Treasury Secretary publication released on October 13, 2020, the following nations are on the Boycott Country List:
- Saudi Arabia
- United Arab Emirates
If a U.S. taxpayer must file IRS Form 5713 but willfully fails to do so, then IRS may assess a $25,000 penalty, imprisonment up to one year, or both, on top of other potential penalties.
Contact your BKD Trusted Advisor™ or submit the Contact Us form below to determine if you may have a reporting obligation on Form 5713.