The Bureau of Economic Affairs (BEA) is a division of the US Department of Commerce. The BEA administers the so-called Form BE-10 survey, which is an intensive information gathering tool of the US government. The BE-10 is used to collect information on how US persons are investing abroad and on foreign investment in the US. The survey is used to come up with statistics delineating the changing trends in investment activities of US-owned businesses in foreign countries.
Make no mistake, Uncle Sam wants to know about everything you do and about everything you invest in! The information collected by the BEA is granted confidentiality protection under the International Investment and Trade in Services Survey Act. Under this Act, the BEA is prohibited from granting another agency access to the data for tax, investigative, or regulatory purposes.
In a Nutshell: Form BE-10
Here’s a brief overview about the Form BE-10 survey.
“US Persons” having a 10 per cent or more holding in a foreign (non-US) corporation, trust, estate or other type of unincorporated entity (a “foundation” jumps to mind) at the end of the US person’s 2019 fiscal year, must file Form BE-10 by June 30th. This is actually the extended deadline (original deadline was May 29, 2020) due to the COVID-19 pandemic.
If you need help getting this filed, contact me.
‘US Persons’ includes not only US citizen individuals (but see below for US individuals residing outside the USA), but US corporations and LLCs. Executors of US estates, as well as trustees, beneficiaries and settlors of both US and foreign trusts may also have a BE-10 reporting obligation if the estate or trust in question owns reportable interests in foreign business enterprises.
A separate form must be filed for each foreign entity in which a US Person has a holding. Various income and asset thresholds determine exactly what information has to be supplied to the BEA.
Form BE-10 must also be filed to report ownership in non-US real property investments, unless that real property is held only for personal use.
A response is required from entities subject to the reporting requirements, whether or not contacted by BEA.
A Nice Carve-out for US Individuals Abroad
For purposes of the Form BE-10, a US person means any person resident in the United States or subject to the jurisdiction of the United States.
The Instructions to the Form BE-10 (at pages 4-5 definitions) provides some clarification for making the determination about an individual’s country of residence or where the individual is subject to jurisdiction. There is a carve-out rule that can apply to many US individuals living abroad. Generally, individuals who reside or expect to reside, outside their country of citizenship for less than one year are considered to be residents of their country of citizenship. Individuals who reside, or expect to reside, outside their country of citizenship for one year or more are considered to be residents of the country in which they are residing.
For example, a Swiss citizen who resides in the US for more than a year is a US person for purposes of Form BE-10. On the other hand, a US citizen residing abroad (for example, residing in the UAE) for more than a year generally is not a US person for purposes of filing the Form BE-10. Certain exceptions apply to this carve-out rule. The rule will not apply if the individual residing abroad is working for a US company in order to conduct business for the enterprise and intends to return to the US within a reasonable period of time. Furthermore, individuals who reside outside their country of citizenship because they are government employees (such as diplomats, consular officials, members of the armed forces, and their immediate families) are considered residents of their country of citizenship regardless of their length of stay.
You Never Heard of the Form BE-10?
The BE-10 is not a tax form and it is not due annually (it is required every 5 years). As such, it is often overlooked – but penalties for not filing this form can be severe (up to $48,192 which is the statutory penalty as adjusted for inflation) and up to one year imprisonment for those who willfully fail to file.
More detailed information about the BE-10 can be accessed by visiting the website of The Bureau of Economic Affairs here.
Posted June 19, 2020
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