Faculty Notes

Prof. Norman Silber’s Article on US Nonprofits’ Use of Foreign Blocker Corporations Makes 2 SSRN Top 10 Lists

Norman I. Silber, Professor of Law

Professor Norman Silber’s co-authored article “The Use of Foreign Blocker Corporations by U.S. Nonprofits: Should Blockers Be Blocked?” (with John C. Wei) recently made the SSRN Top 10 download lists for:

• FEN: Differences in Taxation & Corporate Finance (Topic)
• Nonprofit & Philanthropy Law eJournal

Many U.S. nonprofits use offshore blocker corporations to avoid paying the debt-financed unrelated business income tax (UBIT). Some law-makers 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.

Read the full article on the SSRN website.