Do You Own An Interest In A Foreign Business?

Jun 25, 2015

Every five years the U.S. Department of Commerce, by way of the Bureau of Economic Analysis (BEA), requires individuals, estates, trusts, or businesses who own more than a 10% interest in a foreign company to complete a survey on Forms BE-10. The entity owning a foreign business is required to file at least two forms, one based on their own data, and one based on the data of each foreign company they own. The last such survey was conducted based on 2009 data, which means the BEA is now requesting the survey to be completed based on 2014 information.

In the past, this survey was a backburner item for most, as it was only required to be completed if the BEA specifically contacted an entity, requesting them to complete the forms. This meant that the majority of entities were able to get by without ever actually completing the survey. However, this all changed in November of 2014 when the BEA announced it was broadening its scope of those required to complete the forms. As a result of this modification, the BEA is now requiring the completion of the forms by any entity who, at any point during a given year, owned 10% or more of a foreign company, regardless of whether or not they were actually contacted by the BEA.

This is an extremely significant change since it is likely that most entities subject to this requirement are not aware that these forms even exist. In addition, failing to complete the survey could result in some fairly large fines, including civil penalties starting at $2,500 and capping at $25,000, and criminal penalties of up to $10,000. Also, if the entity required to file is an individual, and they fail to do so, they may be subject to imprisonment for up to one year. These hefty fines and penalties mean that it is important for entities to know if they may be subject to the reporting, and to make sure they complete the reporting on time.

As previously stated, the general requirement is that the forms should be completed by any individual, estate, trust, or business, who at any time during 2014 owns a 10% or greater interest in a foreign company. It is important to note that this ownership interest includes both direct and indirect ownership. Indirect ownership means that if an entity owns an interest in a business, and that business in turn owns a greater than 10% interest in a foreign business, the first entity may be required to complete the forms, since they may indirectly own more than 10% of the foreign company. With that being said, there are some exceptions to this general requirement, which means it is important to consult with your WVCO advisor as to whether or not your specific situation falls under the requirement umbrella.

Probably the most important item to keep in mind is the due date of the forms. Depending on how many forms an entity is required to file, the due date may differ. For 2014 data, the due date for entities filing less than 50 forms was May 29, 2015, and the due date for entities filing more than 50 forms had been pushed back from its original June 30, 2015 deadline. The BEA may grant extensions until July 31  or August 31, 2015, and are to be considered granted otherwise unless the BEA contacts you. With this deadline fast approaching, please feel free to give our office a call so we can aid in determining your status, and assist in getting the required forms submitted on time.

By: Ruben Becerra, Staff Accountant

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