In recent years, tax practitioners who have clients with foreign assets have been inundated with information regarding offshore filing requirements. The vast majority of information publicized focuses on the FBAR filing requirement, with supplementary focus on forms required to be filed with a taxpayer’s Form 1040 (such as Forms 8938 and 5471). However, as is the case with the FBAR, non-tax forms can be required for individuals with certain foreign assets. One such form is Form BE-10, and is required for (among others) taxpayers owning foreign rental real estate. The form must be filed by June 30.
Form BE-10 is required by the Department of Commerce; it is not an annual form, but rather is required once every five years. The form is due in 2015 and, under current law, will be next due in 2020. The form is generally targeted at businesses and their owners; however, included within the scope of the form’s reporting requirements are any economic activities done overseas. Such activities include those who own a property in another country and rent it to third parties.
Penalties exist for the failure to failure Form BE-10; civil penalties for a failure to file can be as high as $25,000. Where the failure is willful, a fine of an additional $10,000 can also be assessed. Of heightened concern is criminal ramifications: Where a party knows they have a failure to file Form BE-10 and fail to do so, a sentence of up to one year in jail may be imposed.
Form BE-10 is not a form required by the Internal Revenue Service; most tax practitioners are thus unfamiliar with its existence. However, advising clients for whom a filing requirement would exist of its applicability is vital to ensure the client does not incur unforeseen and unanticipated penalties.
Patrick J. McCormick is an associate with the firm. He earned his J.D. from Vanderbilt University Law School in 2008, and his LL.M. from the New York University School of Law in 2009.Mr. McCormick handles an assortment of tax and estate issues, but specializes in the areas of international tax, offshore disclosures, tax controversy matters, and business planning techniques (including captive insurance companies). He regularly publishes articles and gives presentations on these and other areas of the law.