File 2014 Benchmark Survey or Risk Penalties of $25,000

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US persons with any foreign affiliates may be required to file, depending on their reporting requirements, a BE-10 report with the U.S. Commerce Department’s Bureau of Economic Analysis (BEA).  This is not an IRS form but a requirement by the U.S. government benchmarking survey to secure current economic data on the operations of US companies and their foreign affiliates.  A response is required from persons subject to the filing requirements.  If you fail to report when required then you may be subject to a civil penalty of not less than $2,500 and not more than $25,000.

Who must file the BE-10 Report

This report is required of any U.S. person that has or had a foreign affiliate who had a direct or indirect ownership or control of at least 10 percent of the voting stock of an incorporated foreign business enterprise at any time during the U.S. person’s 2014 fiscal year.  If the U.S. person had no foreign affiliates during its 2014 fiscal year then it must file a “BE-10 Claim for Not Filing”.  Each U.S person needs to determine what forms of the BE-10 they need to file.  The forms comprising the BE-10 report are the following:

  1. BE-10A:  this report is for the U.S reporter that has a foreign affiliate.  This form needs to be completed in its entirety if the U.S. reporter that had any of its total assets, sales or gross operating revenue, or net income after provision of U.S. income taxes greater than $300 million at any time during the U.S. reporter’s 2014 fiscal year.  If the U.S. reporter on any of the three items was not greater than $300 million then you must only complete items 1-42 and items 97-114 of form BE-10A.  Now whether the U.S. report files a complete or partial BE-10A it must also complete a form BE-10B, BE-10C, or BE-10D as appropriate for each of its foreign affiliates.
  2. BE-10B:  This form is required for owned foreign affiliates of U.S. parents with assets, sales, or net income greater than $80 million (positive or negative)
  3. BE-10C:  This form is required for owned foreign affiliates of U.S. parents with assets, sales, or net income greater than $25 million (positive or negative)
  4. BE-10D:  This form is required for owned foreign affiliates of U.S. parents for which no one of the items assets, sales, and net income was greater than $25 million (positive or negative).

It is important to note that if the U.S. reporter is an U.S. business enterprise who is owned by more than 50 percent by either an individual, estate, trust, or nonprofit organization and that U.S. business enterprise in turn, owns a foreign affiliate, then the U.S. reporter is deemed to be the U.S. business enterprise and not the individual, estate, trust or nonprofit organization.  Therefore the BE-10 report and BE-10A should only be filed by the U.S. business enterprise and not the individual, estate, trust or nonprofit organization.

U.S. Reporter Owned by a Foreign Person

If the U.S. reporter is owned by a foreign person that is it is a U.S. affiliate of a foreign person then it might be also required to file a 2014 BE-15A, Annual Survey of Foreign Direct Investment in the United States.  In that case then it should only complete items 1-11, 33-35, 53-56, 60-85, 91-96, and Part V1 of form BE-10A.  However if the U.S. report is also required to file a BE-15B, or BE-15C in lieu of the BE-15A then it is required to complete the entire form BE-10A.

If the U.S. reporter is owned by a foreign person then it is also required to file a 2014 BE-15 report which consists of the following reports:

  1. BE-15A:  this form is required if the U.S. affiliate that is owned by a foreign parent if any of its total assets, sales or gross operating revenues, or net income (loss) exceeded $275 million.
  2. BE-15B:  this form is required if the U.S. affiliate that is owned by a foreign parent if any of its total assets, sales or gross operating revenues, or net income (loss) exceeded $120 million.
  3. BE-15 (EZ):  this form is required if the U.S. affiliate that is owned by a foreign parent if any of its total assets, sales or gross operating revenues, or net income (loss) exceeded $40 million.
  4. BE-15 (claim for exception):  this form is required if the U.S. affiliate that is owned by a foreign parent if none of its total assets, sales or gross operating revenues, or net income (loss) exceeded $40 million.

Auto Dealers who own Offshore Reinsurance Companies

Many auto dealers have reinsurance companies to boost their profits on vehicle service contracts.  These reinsurance companies typically are formed offshore but elect under section 953(d) to be taxed domestically on Form 1120-PC, U.S. Property and Casualty Insurance Company Tax Return.  A captive offshore insurance company’s election under section 953(d) of the Internal Revenue Code to be treated as a US company should not be relevant to this filing.  However, as a 10% or more US owner of a section 953(d) offshore insurance company you are required to file the BE-10.  Although these companies are taxed as U.S. entities, they are still considered foreign entities for the BEA reporting.

Filing for an Extension

If you cannot file Benchmark Survey forms by the due date of June 30th then you may file for an extension to file until either July 31th or August 31th.  Reasonable requests for extension of the filing deadline will normally be granted if requested before the due date by submitting the PDF extension form which can be found on the BEA website of www.bea.gov.

Please contact the Bureau of Economic Analysis (BEA) for additional information.  You can also visit www.bea.gov for additional information regarding the Benchmark Survey or any other foreign affiliates reporting requirements.

Feel free to contact anyone of our Firm’s tax specialists at info@rosenfieldandco.com.