Any U.S. person (full legal meaning: individual, corporation, etc.) that owns 10% or more voting stock, directly or indirectly, of an incorporated foreign enterprise or equivalent interest in an unincorporated foreign enterprise is subject to U.S. direct investment reporting by The U.S. Bureau of Economic Analysis (BEA). Any such U.S. person subject to reporting is a “U.S. reporter.” A “foreign affiliate” is a separate enterprise from U.S. domestic operations and activities, whether it is legally or functionally separate, that falls within the ownership requirement parameters described above. U.S. reporters would include at a minimum entities that require filing of forms 5471, 8865, and 8858 with their U.S. income tax return.
U.S. persons with foreign affiliates that meet the filing requirements must file the requisite forms every five years on the mandated benchmark calendar year. As 1989 was the first benchmark year, the 2014 calendar year is a benchmark year. The content of the filing is based on the U.S. reporter’s fiscal year that ends in the 2014 benchmark calendar year. For new BE-10 filers (a U.S. person that has not filed in the past or been contacted by the BEA) the deadline for filing the 2014 benchmark year survey is June 30th, 2015. If a U.S. person has filed a BE-10 in the past or was contacted by the BEA, the deadline for the 2014 benchmark was May 29, 2015. Penalties for failure to file range from $2,500 to $25,000. An additional $10,000 may be fined for willful failure to file. This is a mandatory filing.
The U.S. reporter is required to file form BE-10A, and based on the fact pattern for each foreign affiliate either form BE-10B, BE-10C, or BE-10D must be filed. A U.S. individual that owns a foreign affiliate through a U.S. business enterprise only files at the U.S. business enterprise level. The only exemptions from filing available are: (1) if the U.S. reporter is fully consolidated into the BE-10 report of another U.S. reporter, (2) the U.S. reporter is a foreign citizen residing in the U.S. as an official employee of a foreign government, (3) the U.S. reporter that as a foreign citizen has been or expects to reside in the U.S. for less than one year. In the aforementioned circumstances a BE-10 Claim for Not Filing must be filed. Unless the filer qualifies for one of the above exemptions, at a minimum a U.S. reporter will have to file form BE-10A and BE-10D as there is no de minimis filing level. Consolidation of the BE-10 filings is only required for U.S. reporters that are corporations not owned more than 50% by another U.S. business enterprise, and the consolidation includes all other entities more than 50% owned by that U.S. business enterprise.
In the past only repeat filers or those contacted by the BEA were required to file, but as of the final ruling on November 20, 2014 of 79 Fed. Reg. 69014 filing is required even if there has been no prior filing or contact from the BEA. As such there are many “new filers” that may be unaware of the filing requirement for 2014. Therefore it is critical for new filers to evaluate BEA filing thresholds to determine required filings, and file the appropriate BEA forms by the new deadline of June 30th, 2015. We recommend filing online through the BEA website.
You can find more detail on filing requirements at the following links from the BEA:
Please reach out to your Elliott Davis Decosimo tax contact or Steven Nash 864.370.5690, or Kay Biscopink 864.250.3941 for questions.