A little known statute authorizing the collection of comprehensive financial information of US persons with foreign investments has been receiving a great deal of attention recently particularly by those unaware of the filing requirements and associated stiff penalties for non-compliance. The information in question is reported on form BE-10 to the Bureau of Economic Analysis, and while not a tax requirement by any means and potentially more comprehensive, mirrors in part some of the information typically reported by US taxpayers.
Purpose:
The BE-10 is required by the Bureau of Economic Analysis and is used to collect comprehensive statistics on US direct investment abroad. It is not a tax form and will not be used for tax purposes.
Authority:
The information requested is authorized by the President and Congress pursuant to notification provided in the Federal Register and is mandatory. Penalties for failure to comply are provided
Penalties:
Penalties for failure to report range from $2,500 to $25,000 and injunctive measures can be invoked to force compliance. Willful failure to report is subject to a $10,000 penalty and up to one year in prison. An officer, director, employee or agent of the US reporter is also subject to the same civil penalties.
Who Must File:
A BE-10 report is required by any US person that had a direct or indirect 10% voting ownership interest in a foreign affiliate, or equivalent in an unincorporated foreign enterprise at any time during 2014.. A US reporter that is an individual, estate, or trust or nonprofit that owns a foreign affiliate is also required to report.
Due Date:
June 30, 2015
Confidentiality:
Data provided is confidential and is authorized only for analytical and statistical purposes. The reported information cannot be used for taxation, investigation or regulation. Moreover, information cannot be presented in a manner that allows it to be individually identified.
Fling Process:
Forms may be filed electronically or in hard copies. The BEA eFile System is preferred.
Filing Requirement:
Every five years
What is Reported:
Information required by the BE-10 can be quite comprehensive and includes both financial data as well as operational data. Note: in some instances the financial data requested does not follow GAAP (Generally Accepted Accounting Principles). Examples are as follows:
|
Financial Data |
Operational Data |
| Assets | Fiscal year end |
| Liabilities | Ownership structure |
| Equity in affiliates | Products and services |
| Total Sales | Primary Industry |
| Net Income |
Forms Required:
Each US reporter files a BE-10A form and for each foreign affiliate either a Form BE-10B, BE-10C or BE-10D will be required.
Reporting Criterion:
Depending on the size of the enterprise as measured by assets, sales or net income (whichever is greater) – all or a part of the form will be required to be completed. With respect to the BE-10B-D forms in addition to size, the majority or minority ownership by the US reporter will also determine which Forms will be required.
Observation:
Based on discussions and the length of wait time on the help lines, the Bureau is clearly overwhelmed by the volume of data from respondents and are having difficulty responding to questions and processing everything timely. Despite their statement that eFiling is the preferred method, they are asking first time filers not to file electronically but rather use the PDF forms and mail in. Apparently, the process for getting registered with a password, etc. is cumbersome at this point resulting in delays in the filing process. They reiterated that there is no materiality threshold, so if a US reporter meets the filing requirements, the relevant forms should be filed. The Wolf Group can assist clients in determining what their specific filing requirements are as well as assist in the preparation and filing of the required forms.
