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The Use of Offshore Blocker Corporations by U.S. Nonprofits: Should Blockers Be Blocked?

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  • Silber Norman I.
  • Wei John C.

    (Yale, CT, USA)

Abstract

Many U.S. nonprofits use offshore blocker corporations to avoid paying the debt-financed unrelated business income tax (UBIT). Some lawmakers and commentators, however, criticize the practice as abusive. This article takes a closer look at the issue. It concludes that the use of offshore blocker corporations does not undermine the main purposes of the debt-financed UBIT, but that the practice nevertheless raises some serious policy concerns. The article thus recommends that Congress reform this tax: either by eliminating the blocker corporation workaround to the debt-financed UBIT or, alternatively, by repealing the debt-financed UBIT completely but leaving in place or even expanding the debt-financed UBIT’s reporting requirements.

Suggested Citation

  • Silber Norman I. & Wei John C., 2015. "The Use of Offshore Blocker Corporations by U.S. Nonprofits: Should Blockers Be Blocked?," Nonprofit Policy Forum, De Gruyter, vol. 6(3), pages 353-370, November.
    • Handle: RePEc:bpj:nonpfo:v:6:y:2015:i:3:p:353-370:n:5
    DOI: 10.1515/npf-2015-0010
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