Posted by Stephanie L. Chapman, CPA
In recent years, the IRS, Department of Treasury, and other U.S. regulatory agencies have focused on implementing/enforcing reporting programs to ensure U.S. citizens with foreign income are submitting proper reports to the IRS. One of the reports, the Report of Foreign Bank and Financial Accounts (FBAR) is required to be submitted to the Department of Treasury by June 30, 2015. While most individuals are aware of this reporting requirement, a new requirement has been added. The Bureau of Economic Analysis (BEA) of the Department of Commerce is now requiring that U.S. persons with foreign business enterprises provide specific business activity, product, and sales information. This information, which is submitted in the form of a survey, used to be submitted only when requested by the BEA. However, the new rules require that the survey be submitted without a direct request from the BEA. To help clients, prospects, and others to better understand the reporting requirement, Belfint Lyons & Shuman has provided a summary below.
For several years the BEA has sent out information requests to U.S. individuals engaged in international activities to learn more about the nature of their work, employment figures, sales data, nature of transactions between the person and the foreign affiliate, and other important business information. Only those selected to participate were required to provide information to the BEA. However, in 2014 the rules changed and the BEA mandated that such reporting is now required without a specific request from the BEA. The economic information which is submitted in BE-10, Benchmark Survey of U.S. Direct Investment Abroad, needs to be submitted by qualifying persons each year on or before May 29. However, in 2015 first-time filers have been granted an extension until June 30 to submit their filing.
Who Has to File?
There are very specific rules governing who is required to file. Generally, any U.S. person (individual or company) is required to submit Form BE-10 if they had ownerships or controlled at least 10% of the voting stock of a foreign corporation. In addition, a report must also be filed if there was an equivalent interest in an unincorporated foreign business. The filing deadline for persons who meet the above criteria for 2014 is June 30, 2015.
Penalties for Non-Compliance
Like most reporting programs there are penalties for non-compliance The BEA can impose penalties ranging from $2,500 to $25,000 for qualifying U.S. individuals and companies that fail to submit the required BE-10. Any office, director, or employee of a company that participates in willful violations may be subject to criminal penalties and fines of up to $10,000.
Time is running out to prepare your benchmark survey. If it is unclear whether a reporting requirement exists, then it’s essential to contact an advisor that can guide you through the process. Whether you need assistance with the determining qualification, survey preparation, or with your FBAR, Belfint Lyons & Shuman is here to help! For additional information contact us at 302.255.0600, or click here to contact us. We look forward to speaking with you soon.