Issue

A few months ago we talked about Form 5713 and reporting “operations” in countries that the U.S. Government has deemed to be “boycott countries.” It can be somewhat difficult to find the current list.

Situation

Denali Christian College (DCC) is a public charity and a school under I.R.C. sections 501(c)(3) and 170(b)(1)(A)(ii). As DCC prepares to conduct their summer missions trips to the Middle East, their CFO calls to say that they have been discussing “boycott countries”. However, they are concerned because they cannot find a current list of these countries. (The most recent Form 5713 instructions refer to the 2010 “list”.)
We tell them that the most recent list was just released – dated March 16, 2017. Also, there is some “gray area” as to what constitutes “operations” or “commercial activities” in a boycotting country.

Rules

From Form 5713, International Boycott Report, Instructions:

Who Must File
You must file Form 5713 if you are a U.S. person (defined in section 7701(a)(30)) that has operations (defined on page 2) in or related to a boycotting country, or with the government, a company, or a national of a boycotting country.

Operations The term “operations” means all forms of business or commercial activities and transactions (or parts of transactions), whether or not productive of income, including, but not limited to: selling; purchasing; leasing; licensing; banking, financing, and similar activities; extracting; processing; manufacturing; producing; constructing; transporting; performing activities related to the activities above (for example, contract negotiating, advertising, site selecting, etc.); and performing services, whether or not related to the activities above.

The “List”
In March 2017, the U.S. Treasury Department released the current “boycott countries” list that includes nine countries as follows:

Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, United Arab Emirates, Yemen.

Bottom Line

It is wise to monitor your foreign “operations”. The boycott countries list is somewhat difficult to find – we hope this will be a reference for you. Also, you should run all international issues past your skilled, knowledgeable, and experienced not-for-profit tax professional. They will be able to help you navigate these potentially treacherous waters.

Specific questions? Email Dave Moja.

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.