Foreign Direct Investment in the U.S. Reporting
If you are a nonresident foreign individual or entity, and have or are planning on investing in the U.S., there are some non-tax forms you need to file. Most foreign investors don’t realize that the U.S. Department of Commerce requires foreign direct investment in the U.S. to be reported. Failure to report will result in penalties!
Under the International Investment and Trade in Services Survey Act (IITSSA), various surveys are required in order for the U.S. Department of Commerce to gather an accurate and complete understanding of what kind of international investment is occurring in the U.S. All investment in U.S. business enterprises in which a foreign person owns at least a 10% voting interest are subject to these reporting requirements. The definition of a business enterprise is broad, and it isn’t always clear what does and does not constitute a business enterprise. Careful analysis is required to make this determination. Additionally, the purchase of U.S. real estate by a foreign investor could be reportable.
For the enterprises mentioned above, the IITSSA specifically requires quarterly reports on Form BE-605, with certain exceptions, and annual reports on Forms BE-15. There are three different Form BE-15 and total assets and voting interests will determine which form you use.
In the past, enforcement has been lax, but recently the Department of Commerce has stepped up its enforcement. The Department is serious about compliance; each failure to comply is subject to a civil penalty of up to $32,500 (adjusted for inflation), and individuals who knowingly or willfully fail to comply may be fined up to $10,000 and/or imprisoned for up to a year.
Esquire Group will evaluate your investment, establish your reporting requirements, determine the applicable forms required, and ensure your compliance with the U.S. Department of Commerce regulations. And, if you are out of compliance, don’t worry; we will help get you back to where you need to be.