Georgetown Law held its 38th Annual Representing and Managing Tax-Exempt Organizations conference (virtual edition) last month. Among the sessions at the conference was Legal and Tax Issues for Foreign Offices and Affiliates presented by Stephanie Biden, Ricardo A. Castro, and Curtis Saueressig. Below are some of the many highlights from their presentation:

At the Front End

  • Determine the organization’s objectives before establishing a foreign office or affiliate.
    • Is a foreign office or affiliate required?
  • Understand the alternatives.
    • Is there a partner organization or consultant already properly registered, licensed, and/or qualified to do business there?
  • Consider different forms that a foreign office or affiliate may take
    • What types of benefits are each form?

Up and Running

  • Find the right counsel and advisors.
  • Select the appropriate form of foreign office or affiliate.
  • Comply with all of the initial filing, registration, and reporting requirements.
  • Understand, adapt the plan, and comply with all of the foreign and U.S. legal requirements, including re: human resources, banking and finance, tax, audit, real estate, and special circumstances (e.g., pandemic-related, freedom of speech).
  • Understand and manage common legal issues, including employment, governance (including related to the relationship between the headquarter and local office), tax, programmatic (particularly if involved in regulated activities), security incidents, forced office closures, data privacy and protection.

Ongoing Compliance

  • Risk identification and assessment.
  • Mitigating known exposures.
  • Continuous monitoring – determine the scope and timing, coordinate with staff and board, utilize effective checklists and workplans.

A Graceful Exit

  • Plan well in advance.
  • Consider whether there are preferable alternatives to closing down / dissolving (e.g., prolonged dormancy).
  • Ensure compliance; protect former local employees from being held responsible after the exit.