Articles

Information Reporting Deadline Nears for U.S. Persons with Foreign Businesses – No COVID Extensions by Joel Young, JD, LLM

Posted on April 21, 2020

Every five years, the Bureau of Economic Analysis (BEA) requires U.S. persons (including entities) with certain foreign affiliates to file Form BE-10, Benchmark Survey of U.S. Direct Investment Abroad, by a statutory deadline of May 29 or June 30, 2020. The COVID-19 pandemic has caused any postponement of the final BE-10 due date, which depends on the number of forms U.S. persons are required to file.

The BE-10 is not an IRS form. Rather, it is a mandatory benchmark survey, performed by a branch of the U.S. Department of Commerce, to gather economic data about the operations of U.S. parent companies and their foreign affiliates. The resulting statistics provide a snapshot of the scale and effect of U.S.-owned business activities abroad, which policymakers and business leaders rely on to make informed decisions about hiring, investing, wages and taxes. Federal privacy laws protect all data collected by the BEA, and the government must obtain the permission of each person who files a report before sharing any identifying data.

In general, a BE-10 is required of any U.S. individual, business, estate or trust that had direct or indirect ownership or voting control of at least 10 percent of a foreign affiliate during the U.S person’s 2019 fiscal year. Foreign affiliates can include incorporated foreign business enterprises, equivalent interest in unincorporated foreign business enterprises and even inactive companies.

The deadline for U.S. persons required to file 50 or fewer BE-10 reports is May 29, 2020.  For all other qualifying U.S. persons, the due date is June 30, 2020.  If you were contacted by the BEA but you did not have any foreign affiliates during the 2019 fiscal year, you still have an obligation to file Form BE-10 Claim for Not Filing by May 29, 2020. Persons who need more time to file may request a filing extension by the applicable due date and include the substantive reasons for their request. According to the BEA, extension requests are not guaranteed, but “reasonable requests” will be “considered.”

While some owners of foreign businesses will receive a notice from the BEA indicating their requirement to file a BE-10 by the requisite deadline, many will not. This puts the onus on those investors to recognize whether they have a filing obligation. Failure to file can result in civil penalties of $4,735 per required report as well as criminal penalties of $10,000 and up to a year in prison for individuals whose non-compliance was willful.

Depending on the scope of the foreign business’ activities, the BE-10 can be quite extensive. Therefore, it is recommended that anyone required to file a report should start this process as soon as possible under the guidance of their trusted advisors and CPAs.

About the Author: Joel G. Young, JD, LLM, is a manager with the Tax Services practice of Berkowitz Pollack Brant Advisors + CPAs, where he provides tax and pre-immigration planning services to multi-national individuals, businesses, trusts and passive investment entities. He can be reached at the CPA firm’s Boca Raton, Fla., office at (561) 361-2000 or info@bpbcpa.com.