Business Enterprise Filing Requirements
Every five years, the U.S. Bureau of Economic Analysis (“BEA”), a bureau within the Department of Commerce, requires U.S. persons with foreign affiliates to file a BE-10 report. Generally, any U.S. person directly or indirectly owning 10% or more of a foreign business enterprise, at the end of the U.S. person’s 2019 fiscal year, is required to file a BE-10 report, regardless of whether the person was contacted by the BEA.
Defining the Business Enterprise
The term “business enterprise” is broadly defined and includes any organization, association, branch, or venture (whether incorporated or unincorporated) that exists for profit-making purposes or to otherwise secure economic advantage and any ownership of any foreign real estate subject to exceptions for real estate held within a separate business enterprise subject to reporting or held for personal use. Consistent with this definition, the term “business enterprise” includes entities that are disregarded from their owner for U.S. income tax purposes.
Where You Live Makes a Difference
A “U.S. person” is defined as an individual, branch, associated group, association, trust, estate, partnership, corporation, or other organization that is a resident in or subject to U.S. jurisdiction. The BEA has issued some clarifications on how to determine the country of residence or jurisdiction of individuals. As a general rule, 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. Some exceptions apply, most notably for individuals living abroad and working for a U.S. company, such as a U.S. consular officer or member of the armed forces, or persons working in other governmental capacities.
BE-10 Reports and Deadlines
A BE-10 report consists of a Form BE-10A for the U.S. reporter and a separate BE-10 form for each foreign business enterprise. The BE-10 form filed for the foreign business enterprise will depend on the foreign business enterprise’s total assets, sales, and net income, and will be filed on Form BE-10B, BE-10C, or BE-10D.
A fully completed and certified BE-10 report comprising of Form BE-10A and Form(s) BE-10B, BE-10C, or BE-10D is due no later than May 29, 2020, for U.S. reporters required to file fewer than 50 forms, and June 30, 2020, for U.S. reporters required to file 50 or more forms. The BEA will consider “reasonable” requests for an extension. Filers that require an extension must submit the extension request no later than May 29, 2020 (or June 30, 2020, if they are required to file 50 or more forms).
COVID -19 Impact
Due to the COVID-19 outbreak, filers are being encouraged to electronically file through the BEA’s e-file system or by fax. Furthermore, extension requests should be made through the e-file system. Taxpayers are also able to submit their reports using reasonable estimates.
Copies of a submitted BE-10 report should be retained for at least three years.
Penalties for failure to file include monetary penalties and may also include imprisonment for willful failure to file.
Assistance with Your BE-10 Report
The BE-10 forms can be time-consuming to complete and may involve providing substantial amounts of financial data relating to the activities of the filer and its foreign affiliates. These are not tax returns and do not rely on tax-based data or tax computations. Accordingly, many of our clients prepare these forms. We may be engaged by clients to assist in evaluating filing requirements, gathering information, and preparing returns for submission, but please note that we may not e-file reports (including extension requests) on a client’s behalf.
Click here to view the BEA website, including access to forms and instructions and access to the e-file system.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.