
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document affected by Public Law 106-519 Section 4(5)]
[CITE: 26USC999]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
  Subchapter N--Tax Based on Income From Sources Within or Without the 
                              United States
 
              PART V--INTERNATIONAL BOYCOTT DETERMINATIONS
 
Sec. 999. Reports by taxpayers; determinations


(a) International boycott reports by taxpayers

                         (1) Report required

        If any person, or a member of a controlled group (within the 
    meaning of section 993(a)(3)) which includes that person, has 
    operations in, or related to--
            (A) a country (or with the government, a company, or a 
        national of a country) which is on the list maintained by the 
        Secretary under paragraph (3), or
            (B) any other country (or with the government, a company, or 
        a national of that country) in which such person or such member 
        had operations during the taxable year if such person (or, if 
        such person is a foreign corporation, any United States 
        shareholder of that corporation) knows or has reason to know 
        that participation in or co-operation with an international 
        boycott is required as a condition of doing business within such 
        country or with such government, company, or national,

    that person or shareholder (within the meaning of section 951(b)) 
    shall report such operations to the Secretary at such time and in 
    such manner as the Secretary prescribes, except that in the case of 
    a foreign corporation such report shall be required only of a United 
    States shareholder (within the meaning of such section) of such 
    corporation.

         (2) Participation and cooperation; request therefor

        A taxpayer shall report whether he, a foreign corporation of 
    which he is a United States shareholder, or any member of a 
    controlled group which includes the taxpayer or such foreign 
    corporation has participated in or cooperated with an international 
    boycott at any time during the taxable year, or has been requested 
    to participate in or cooperate with such a boycott, and, if so, the 
    nature of any operation in connection with which there was 
    participation in or cooperation with such boycott (or there was a 
    request to participate or cooperate).

                      (3) List to be maintained

        The Secretary shall maintain and publish not less frequently 
    than quarterly a current list of countries which require or may 
    require participation in or cooperation with an international 
    boycott (within the meaning of subsection (b)(3)).

(b) Participation in or cooperation with an international boycott

                          (1) General rule

        If the person or a member of a controlled group (within the 
    meaning of section 993(a)(3)) which includes the person participates 
    in or cooperates with an international boycott in the taxable year, 
    all operations of the taxpayer or such group in that country and in 
    any other country which requires participation in or cooperation 
    with the boycott as a condition of doing business within that 
    country, or with the government, a company, or a national of that 
    country, shall be treated as operations in connection with which 
    such participation or cooperation occurred, except to the extent 
    that the person can clearly demonstrate that a particular operation 
    is a clearly separate and identifiable operation in connection with 
    which there was no participation in or cooperation with an 
    international boycott.

                          (2) Special rule

        (A) Nonboycott operations

            A clearly separate and identifiable operation of a person, 
        or of a member of the controlled group (within the meaning of 
        section 993(a)(3)) which includes that person, in or related to 
        any country within the group of countries referred to in 
        paragraph (1) shall not be treated as an operation in or related 
        to a group of countries associated in carrying out an 
        international boycott if the person can clearly demonstrate that 
        he, or that such member, did not participate in or cooperate 
        with the international boycott in connection with that 
        operation.

        (B) Separate and identifiable operations

            A taxpayer may show that different operations within the 
        same country, or operations in different countries, are clearly 
        separate and identifiable operations.

       (3) Definition of boycott participation and cooperation

        For purposes of this section, a person participates in or 
    cooperates with an international boycott if he agrees--
            (A) as a condition of doing business directly or indirectly 
        within a country or with the government, a company, or a 
        national of a country--
                (i) to refrain from doing business with or in a country 
            which is the object of the boycott or with the government, 
            companies, or nationals of that country;
                (ii) to refrain from doing business with any United 
            States person engaged in trade in a country which is the 
            object of the boycott or with the government, companies, or 
            nationals of that country;
                (iii) to refrain from doing business with any company 
            whose ownership or management is made up, all or in part, of 
            individuals of a particular nationality, race, or religion, 
            or to remove (or refrain from selecting) corporate directors 
            who are individuals of a particular nationality, race, or 
            religion; or
                (iv) to refrain from employing individuals of a 
            particular nationality, race, or religion; or

            (B) as a condition of the sale of a product to the 
        government, a company, or a national of a country, to refrain 
        from shipping or insuring that product on a carrier owned, 
        leased, or operated by a person who does not participate in or 
        cooperate with an international boycott (within the meaning of 
        subparagraph (A)).

                  (4) Compliance with certain laws

        This section shall not apply to any agreement by a person (or 
    such member)--
            (A) to meet requirements imposed by a foreign country with 
        respect to an international boycott if United States law or 
        regulations, or an Executive Order, sanctions participation in, 
        or cooperation with, that international boycott,
            (B) to comply with a prohibition on the importation of goods 
        produced in whole or in part in any country which is the object 
        of an international boycott, or
            (C) to comply with a prohibition imposed by a country on the 
        exportation of products obtained in such country to any country 
        which is the object of an international boycott.

(c) International boycott factor

                  (1) International boycott factor

        For purposes of sections 908(a), 941(a)(5), 952(a)(3), and 
    995(b)(1)(F)(ii), the international boycott factor is a fraction, 
    determined under regulations prescribed by the Secretary, the 
    numerator of which reflects the world-wide operations of a person 
    (or, in the case of a controlled group (within the meaning of 
    section 993(a)(3)) which includes that person, of the group) which 
    are operations in or related to a group of countries associated in 
    carrying out an international boycott in or with which that person 
    or a member of that controlled group has participated or cooperated 
    in the taxable year, and the denominator of which reflects the 
    world-wide operations of that person or group.

           (2) Specifically attributable taxes and income

        If the taxpayer clearly demonstrates that the foreign taxes paid 
    and income earned for the taxable year are attributable to specific 
    operations, then, in lieu of applying the international boycott 
    factor for such taxable year, the amount of the credit disallowed 
    under section 908(a), the addition to subpart F income under section 
    952(a)(3), and the amount of deemed distribution under section 
    995(b)(1)(F)(ii) for the taxable year, if any, shall be the amount 
    specifically attributable to the operations in which there was 
    participation in or cooperation with an international boycott under 
    section 999(b)(1).

                      (3) World-wide operations

        For purposes of this subsection, the term ``world-wide 
    operations'' means operations in or related to countries other than 
    the United States.

(d) Determination with respect to particular operations

    Upon a request made by the taxpayer, the Secretary shall issue a 
determination with respect to whether a particular operation of a 
person, or of a member of a controlled group which includes that person, 
constitutes participation in or cooperation with an international 
boycott. The Secretary may issue such a determination in advance of such 
operation in cases which are of such a nature that an advance 
determination is possible and appropriate under the circumstances. If 
the request is made before the operation is commenced, or before the end 
of a taxable year in which the operation is carried out, the Secretary 
may decline to issue such a determination before close of the taxable 
year.

(e) Participation or cooperation by related persons

    If a person controls (within the meaning of section 304(c)) a 
corporation--
        (1) participation in or cooperation with an international 
    boycott by such corporation shall be presumed to be such 
    participation or cooperation by such person, and
        (2) participation in or cooperation with such a boycott by such 
    person shall be presumed to be such participation or cooperation by 
    such corporation.

(f) Willful failure to report

    Any person (within the meaning of section 6671(b)) required to 
report under this section who willfully fails to make such report shall, 
in addition to other penalties provided by law, be fined not more than 
$25,000, imprisoned for not more than one year, or both.

(Added Pub. L. 94-455, title X, Sec. 1064(a), Oct. 4, 1976, 90 Stat. 
1650; amended Pub. L. 95-600, title VII, Sec. 703(h)(2), (3), Nov. 6, 
1978, 92 Stat. 2940; Pub. L. 98-369, div. A, title VIII, Sec. 802(c)(3), 
July 18, 1984, 98 Stat. 999; Pub. L. 99-514, title XVIII, 
Sec. 1876(p)(3), Oct. 22, 1986, 100 Stat. 2902; Pub. L. 106-519, 
Sec. 4(5), Nov. 15, 2000, 114 Stat. 2433.)


                               Amendments

    2000--Subsec. (c)(1). Pub. L. 106-519 inserted ``941(a)(5),'' after 
``908(a),''.
    1986--Subsec. (c)(1), (2). Pub. L. 99-514 repealed section 802(c)(3) 
of Pub. L. 98-369 thereby restoring former text. See 1984 Amendment note 
below.
    1984--Subsec. (c)(1), (2). Pub. L. 98-369 which substituted 
``995(b)(1)(F)(i)'' for ``995(b)(1)(F)(ii)'' wherever appearing was 
repealed. See 1986 Amendment note above.
    1978--Subsec. (c)(1). Pub. L. 95-600, Sec. 703(h)(2), substituted 
``995(b)(1)(F)(ii)'' for ``995(b)(3)''.
    Subsec. (c)(2). Pub. L. 95-600, Sec. 703(h)(3), substituted 
``995(b)(1)(F)(ii)'' for ``995(b)(1)(D)(ii)''.


                    Effective Date of 2000 Amendment

    Amendment by Pub. L. 106-519 applicable to transactions after Sept. 
30, 2000, with special rules relating to existing foreign sales 
corporations, see section 5 of Pub. L. 106-519, set out as an Effective 
Date note under section 941 of this title.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 effective, except as otherwise provided, 
as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 
98-369, div. A, to which such amendment relates, see section 1881 of 
Pub. L. 99-514, set out as a note under section 48 of this title.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-369 applicable to transactions after Dec. 
31, 1984, in taxable years ending after such date, see section 805(a)(1) 
of Pub. L. 98-369, as amended, set out as a note under section 245 of 
this title.


                    Effective Date of 1978 Amendment

    Amendment by Pub. L. 95-600 effective on Oct. 4, 1976, see section 
703(r) of Pub. L. 95-600, set out as a note under section 46 of this 
title.


                             Effective Date

    Section applicable to participation in or cooperation with an 
international boycott more than 30 days after Oct. 4, 1976, with special 
provisions for existing contracts, see section 1066(a) of Pub. L. 94-
455, set out as an Effective Date of 1976 Amendment note under section 
908 of this title.


           Plan Amendments Not Required Until January 1, 1989

    For provisions directing that if any amendments made by subtitle A 
or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 1800-1899A] of Pub. L. 99-514 require an amendment to any plan, 
such plan amendment shall not be required to be made before the first 
plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. 
L. 99-514, as amended, set out as a note under section 401 of this 
title.


                        Reports by the Secretary

    Pub. L. 94-455, title X, Sec. 1067, Oct. 4, 1976, 90 Stat. 1654, as 
amended by Pub. L. 98-369, div. A, title IV, Sec. 441(c), July 18, 1984, 
98 Stat. 815, which required the Secretary to transmit a report every 
four years to the Committee on Ways and Means of the House of 
Representatives and to the Committee on Finance of the Senate relating 
to reports filed under section 999(a) of this title and describing the 
administration of provisions relating to international boycott activity, 
terminated, effective May 15, 2000, pursuant to section 3003 of Pub. L. 
104-66, as amended, set out as a note under section 1113 of Title 31, 
Money and Finance. See, also, page 141 of House Document No. 103-7.

                  Section Referred to in Other Sections

    This section is referred to in sections 908, 941, 952, 995 of this 
title.
