The BEA Revises its Policy for Granting Extensions of Time for Filing BE-10 Survey Reports

Posted by Todd Lowther, John Cohn, and Nancy Allred                The U.S. Department of Commerce Bureau of Economic Analysis (the “BEA”) is currently conducting the 2014 BE-10, Benchmark Survey of U.S. Direct Investment Abroad, under the authority of the International Investment and Trade in Services Survey Act.  The BE-10 survey is conducted every five years, covering the universe of U.S. direct investment abroad.  The purpose of the benchmark survey is to obtain statistical data on the financial and operating characteristics of, and on positions and transactions between, U.S. parent companies and their foreign affiliates in order to measure the size and economic significance of U.S. direct investment abroad, measure changes in such investment, and assess its impact on the U.S. and foreign economies.In prior years, the BE-10 survey was required only if the BEA sent a notice to report.  However, the BE-10 survey is now mandatory, and a response will be required from persons subject to the reporting requirements of the BE-10, whether or not such persons have been contacted by the BEA.Reporting Thresholds and LogisticsAny U.S. person who had a “foreign affiliate” at any time during the U.S. person’s 2014 fiscal year is required to report. A “foreign affiliate” is a non-U.S. entity in which the U.S. person had a direct or indirect ownership or control of at least 10% of the voting stock of an incorporated foreign business enterprise or equivalent interest with respect to an unincorporated foreign business enterprise.  The BEA defines a “person” in the broad legal sense to include any individual, branch, partnership, associated group, association, estate, trust, corporation or other organization (whether or not organized under the laws of any state) and any government (including an instrumentality thereof).  A U.S. person with one or more foreign affiliates is referred to as a “U.S. Reporter.”Unlike other BEA surveys, the BE-10 survey does not have a dollar-threshold requirement for filing reports. All foreign affiliates that meet the ownership or control threshold must be reported, whether owned or controlled directly or indirectly as subsidiaries or affiliates of another foreign affiliate.The BE-10 survey is composed of several component forms.  The U.S. Reporter completes a portion of the BE-10 survey, known as a BE-10A to report U.S. financial and operating data. For each foreign affiliate, the U.S. Reporter completes a BE-10B, -10C, or –10D, to report financial data and information regarding its foreign business activities, depending on the characteristics of the foreign affiliate. The U.S. Reporter then certifies and files the complete BE-10 survey with the BEA.Reporting Deadlines, Extensions and PenaltiesThe BE-10 survey can apply in situations that are not readily apparent, and the recent revisions to the deadlines for filing and for requesting an extension for additional time to file reflect the difficulties that potential filers have encountered with these new reporting requirements. For a U.S. entity with 50 or more foreign affiliates and for “new filers” (i.e., U.S. persons that have not previously filed reports or surveys with the BEA), the deadline was recently extended until June 30, 2015.  For a U.S. entity with fewer than 50 foreign affiliates and which is not a new filer, the applicable BE-10 survey was due by May 29, 2015; however, the BEA has expressed a willingness to grant reasonable requests for extensions of time to file for such entities, even though the deadline has passed.The BEA recently posted a revised application for requesting an extension of time to file the BE-10 on its official website.  According the revised form, the BEA will now automatically grant requests for a 30 to 60 day extension (until July 31 or August 31) for U.S. Reporters that need additional time to gather the necessary information, so long as the request is submitted to the BEA prior to the June 30, 2015.Failure to comply with the BE-10 survey reporting requirements may result in the imposition of penalties. A person who fails to file a required Form BE-10 may be subject to civil penalties of up to $25,000 and, if found to have wilfully failed to file a required Form BE-10, may be subject to criminal penalties. An officer, director, employee, or agent of an entity who knowingly participates in a wilful failure to file may also be subject to criminal penalties.If you would like to discuss the BE-10 survey reporting requirements, survey please contact Todd Lowther, John Cohn, or Nancy Allred at Thompson & Knight LLP.