Form BE-10 is due May 29 2020. Never heard of it? That’s because it’s only required every five years, and it is not a tax form, so it’s not widely discussed.
So, why are we alerting you to it? Because like many of the foreign forms we deal with, it carries penalties of USD25,000 and up to one year in prison.
Also, since it’s not a tax form, it doesn’t fall under the IRS, and it isn’t covered by the COVID-19 filing extensions. Instead, it’s a survey issued by the Bureau of Economic Analysis (BEA), which is the agency of the US Department of Commerce that tracks statistics, such as the US gross domestic product.
The BEA just released the requirements, due date, and other details of this year’s filing.
Form 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.
The information requested is authorised by the President and Congress pursuant to the notification provided in the Federal Register and is mandatory. Penalties for failure to comply are provided.
Who Must File
A BE-10 report is required for those involved in any of the following at any time during 2019:
- US owners of foreign real estate held as a rental or for investment. US owners can include individuals, businesses, trusts, estates, and other legal organizations.
- US owners of foreign businesses. This includes US individuals, businesses, trusts, estates, and other legal organisations that conduct for-profit activities outside of the US and that own or have the voting authority of 10% or more of a foreign business. The foreign business can be incorporated or unincorporated.
- US self-employed individuals who perform consulting services or conduct for-profit activities outside the US. Generally, this applies to self-employed US persons who live and work outside the US or who have business assets or office space outside the US.
Clarifications on Filing Requirements
- The filing requirement applies to both direct and indirect ownership interests. So, if you own a company through your LLC, you are not necessarily exempt from filing.
- In certain situations, one US owner may be allowed to file on behalf of others rather than all owners being required to file. Alternatively, a US owner may choose to report only his or her data, if that owner prefers not to obtain data about the other owners.
- A US owner who wholly owns a foreign entity that owns another foreign entity may be able to consolidate all activity of the two foreign entities.
Penalties for failure to report range from USD2,500 to USD25,000 and injunctive measures can be invoked to force compliance. Willful failure to report can also carry a penalty of up to one year in prison. An officer, director, employee, or agent of the US reporter is also subject to the same civil penalties.
May 29 2020
Every five years
Forms may be filed electronically or in hard copies.
What Is Reported
The amount of data that must be reported on the survey is directly correlated with the size of the reportable activity. There are several versions of the survey, the BE-10A, BE-10B, BE-10C, and BE-10D.
In its most simplistic format, the survey requires some basic information about the foreign activity and requests data on its assets, liabilities, sales, and net income. In the more robust versions, questions can include topics on changes in accounting method, values of research and development performed, and cloud computing in the digital economy. Thresholds for reporting range from USD0-USD25 million, USD25-USD80 million, and USD80 million-plus. Entities with losses are also required to file.
Some surveys must be completed in their entirety while others need only be partially completed. Related-party transactions, such as loans from the foreign entity to the US owner and vice versa, need to be disclosed. A foreign entity operating outside of its country of incorporation may need to file more than one survey.
It is important to note that, not only are calendar year filers required to file, but fiscal year filers are as well. Typically, the fiscal period of the foreign entity that ends within 2019 is the period that is required to be reported.
Will I Receive a Notification if I Need to File the BE-10?
Not necessarily. In some cases, BEA is sending notifications in March to inform certain filers of the filing requirement personally. However, they are not sending notifications to many types of filers. Just because you did not receive notification does not mean you do not need to file the survey! And anyone who receives the notification but does not meet the filing criteria still has to file a separate form to state that they do not meet the filing criteria.
What is a Legal Entity Identifier Number?
Most versions of the survey will also begin requesting the taxpayer’s 20-digit Legal Entity Identifier (LEI) number. Simply put, the LEI is a global identifier that acts as a unique identifier that is used to standardize information on legal entities globally.
How do you get one? According to the Office of Financial Research, to register your US legal entity, contact the Global Legal Entity Identifier Foundation (GLEIF) accredited LEI issuing organization of your choice.
How Can The Wolf Group Help?
Since we already assist many clients in reporting their foreign assets and foreign income to the IRS each year, we are accustomed to working with these foreign informational forms. Plus, we assisted numerous filers with their BE-10 requirements when they were last due 5 years ago.
We can help you:
- Determine whether you need to file
- Identify the information needed to complete your filings
- Prepare the filings for submission
- Help you submit them to the BEA
If you would like to discuss your personal situation with regard to the BE-10 requirement, please contact us.
For more information, contact:
The Wolf Group
Date: May 2020