Here’s a little scenario for you: It’s a beautiful summer day and people are out and about in the park. They’re smiling and happy and making the best of the stunning weather. A pleasant-looking person walks past you and you think nothing of it. Until WHAM. They just clocked you in the back of the head.
What on earth? You didn’t do anything wrong and you just got slammed by a fist-sized mass of bone and muscle. You turn around, your hand pressed to your smarting head, and ask a simple, heart-felt, and utterly perplexed question – “Why? Why would you hit me for no reason at all?”
This person, whom you’ve never met before, informs you that they’ve decided to smack the head of anyone who doesn’t offer them some form of “good day” or “hello.”
Now that we have the whole setting, we can quickly figure out that you’re the jerk for not saying hello. Right? WRONG! That’s absolutely insane. The person who hit you, under the assumption that they can punish people for their own absurd expectations, is clearly in the wrong. Punishing someone for something you’ve decided on without notifying them is not only crazy, but morally bankrupt.
Ladies and gentlemen, welcome to Form BE-10 under the Bureau of Economic Analysis (BEA), a branch of the US Department of Commerce.
You’ve got to be kidding me
I’ve said it (unhappily) before and I’ll say it (even more unhappily) again – everyday, some poor US taxpayer, having some form of business overseas, learns that they are in non-compliance with some horrible IRS/US Government form. As someone who has ate, slept, and breathed taxes for the past decade, I understand their frustration. The US tax code and IRM (Internal Revenue Manual) are so complex, that many IRS Agents will never have an understanding of all aspects of the law.
So how does it make sense that the US government expects taxpayers to know these things? From 1040s for reporting worldwide income to FBARs for disclosing foreign bank accounts and life insurance, the tip of the iceberg can be overwhelming by itself. While the mass of required forms and programs have been a frustrating reality up to this point, the onset of BE-10 brings the point home.
BE-10 for the everyday taxpayer
Jonathan Lachowitz of the Wall Street Journal Expat blog broke it down nicely.
The BE-10 is a Benchmark Survey from the Bureau of Economic Analysis (BEA) under the U.S. Department of Commerce. The BE-10 is conducted every five years and is meant to cover all U.S. direct investment abroad from both large and small companies; it’s related to the annual BE-11 Survey of Large Companies.
According to the rules, the BE-10 treats people as “companies” and is required for even the smallest economic activity abroad by an individual — for instance, the BEA expects you to report if your small apartment in Mexico generates $5,000 in income each year.
Under the next heading – How was I supposed to know about this new development with the BE-10? – Jonathan brings the reality of the situation home.
You would have known if you read the Federal Register, which is considered a legal notice to U.S. business enterprises (people, too) of their obligation to report. I don’t know about you, but the Federal Register isn’t high on my reading list.
A most unwelcome surprise
The BEA has been around for some time and haven’t been too much of a problem in the past. Their purpose is to survey US persons, companies, trusts, and estates engaged in international ventures. These surveys allow for the BEA to collect information about the US economy. All-in-all, that’s not such a bad thing.
Where things take a nosedive is when this non-tax related filing is made into a mandatory requirement without informing those it affects. Up to this point, the BEA has compiled lists of taxpayers to survey from their income tax filing records. Instead, for the 2014 survey – titled “2014 Benchmark Survey of U.S. Direct Investment Abroad” – the BEA is making it a mandatory requirement that the BE-10 Form be completed. And they’re not contacting anyone.
Just like being clocked by a stranger for an expectation you couldn’t have been reasonably expected to have known, the BEA is operating outside the bounds of decency. In the second part of our look at the rather unscrupulous BE-10, we’ll see its wide-spread effect, filing requirements, impact on current disclosure programs, and penalties for failure to file.