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YET ANOTHER LITTLE-KNOWN JUNE 30 DEADLINE REGARDING FOREIGN ASSET OWNERSHIP THAT CARRIES CONSEQUENCES OF HEFTY PENALTIES AND/OR INCARCERATION.

This year, the Bureau of Economic Analysis (“BEA”), which is an agency located within the United States Department of Commerce, is conducting a survey of U.S. direct investment in foreign business enterprises. The BEA created a survey form, entitled “Benchmark Survey of U.S. Direct Investment Abroad” (known as the “BE-10”) to gather such information. The information reported on the BE-10 includes certain financial data with regard to a U.S. “reporter” (described below) and any related foreign business enterprise.

In prior surveys, a U.S. person had to complete the BE-10 if (i) certain reporting requirements were satisfied; and (ii) if the BEA contacted the person asking them to complete the BE-10. In November 2014, the BEA issued regulations making it mandatory to file the BE-10, with civil and criminal penalties applying to those who do not file. The fines range from $2,500 to $25,000. If the BE-10 is willfully not filed, such individual is subject to a fine of not more than $10,000 and up to one year in prison, or both.

The BE-10 is required of any “U.S. person” (i.e., a U.S. “reporter”) that had direct or indirect ownership or control of at least 10% of the voting stock of an incorporated foreign business enterprise, or an equivalent interest in an unincorporated foreign business enterprise at any time during the U.S. person’s 2014 fiscal year. The term “U.S. person” is defined as any person resident in the United States or subject to the jurisdiction of the United States. The term “person” includes individuals, partnerships, corporations, estates, trusts, associations and other organizations. It should be noted, however, that the BE-10 must only be filed by U.S. residents or non-residents subject to United States jurisdiction. United States residents who have lived outside the United States for more than one year do not have to file the BE-10. However, non-United States citizens who either reside or expect to reside in the United States for one year or more must also file the BE-10.

If you own foreign real estate, this may need to be disclosed on the BE-10. One exception to filing with regard to foreign real estate is that if it is owned exclusively for your personal use, no filing is required.

Other filers include executors of U.S. estates, trustees, beneficiaries, and grantors of domestic and foreign trusts, who all must file the BE-10 if the estate or trust holds a 10% or greater interest in a non-United States business enterprise. With respect to domestic and foreign trusts, the trust itself is generally not considered the owner of the assets. Neither is the trust’s settlor(s) with respect to grantor trusts. In fact, the trust’s beneficiaries are usually considered the owners of a trust’s assets. Therefore, confusion may exist as to who exactly has to file the BE-10 on a trust’s behalf. If either (a) the settlor reserved a reversionary interest in the trust’s assets; or (b) the trust was created by a business entity and that entity’s owners are the beneficiaries, then the settlor must file the BE-10 (as opposed to the beneficiaries).

Please be aware that the BE-10 must be filed no later than June 30, 2015. Should you wish to discuss whether you (or the trustees or beneficiaries of the trust you settled) must file the BE-10, feel free to contact us at your convenience.

THINK TWICE BEFORE YOU….
ASSET PROTECTION TRUST SURVIVES ATTACK

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