BE-13 survey, which is a mandatory reporting requirement for foreign direct investment in the U.S..

The U.S. Bureau of Economic Analysis (BEA) requires certain foreign investors to file Form BE-13 when acquiring, establishing, or expanding a U.S. business. Failing to file can lead to civil and criminal penalties.

The BE-13 survey is not a recurring or periodic report; instead, it is a one-time filing triggered by specific foreign investment activities.

• When Must the BE-13 Be Filed?

  • A U.S. business must file the BE-13 survey within 45 days after:

  • Being acquired (at least 10% ownership) by a foreign entity (BE-13A).

  • Establishing a new U.S. business with foreign ownership (BE-13B).

  • Expanding an existing U.S. business with foreign capital (BE-13D).

  • Meeting reporting exemption criteria (BE-13 Claim for Exemption).

  • If none of these events occur, the business does not need to file the BE-13.

• Foreign Investment

  • BE-13 – Exemption from foreign investment reporting in the U.S. (Less than $3 million)

  • BE-13A – Acquisition of an existing U.S. business

  • BE-13B – Establishment of a new U.S. business

  • BE-13D – Expansion of an existing U.S. business

• PENALTIES

  • CIVIL FINE – Between $4,450 and $44,539 (22 USC Sec. 3105)

  • CRIMINAL PENALTY – Up to one year in prison and $10,000 fine (22 USC Sec. 3105)

Partnerships with Foreign Partners and U.S. Income

• Form 8804 – Annual Return for Partnership Withholding Tax (Section 1446)

• Form 8805 – Foreign Partner’s Information Return for Withholding Tax (Section 1446)

• Form 8813 – Payment Voucher for Partnership Withholding Tax

These forms relate to U.S. partnerships with foreign partners, specifically those with effectively connected income (ECI) in the U.S.

• Form 8804: The partnership reports the total tax withheld on income allocable to foreign partners under IRC Section 1446.

• Form 8805: Each foreign partner receives this form to report their share of withheld U.S. taxes.

• Form 8813: Used by the partnership to submit quarterly tax payments for withholding on foreign partners.

Why Is This Important?

• U.S. partnerships with foreign partners must withhold taxes on income allocated to them, ensuring the IRS collects taxes before distributions.

• These forms help both the partnership and the foreign partners stay compliant with U.S. tax laws.

Penalties:

• $310 per form not filed if submitted more than 60 days late.

• $630 penalty if the noncompliance is intentional.

• Failure to withhold the correct amount – 100% of the unpaid tax plus interest from the due date.

• $310 per foreign partner if the required form is not provided on time.

• If considered intentional, the minimum penalty is $630 per partner.

These penalties apply to U.S. partnerships with foreign partners that fail to properly report or withhold taxes on U.S.-sourced income.

• Failure to file Form 8804, 8805, or 8813 on time can lead to substantial fines.

• Not withholding or under-withholding taxes on foreign partners’ income can result in the partnership being liable for the full tax amount plus interest.

• Intentional violations lead to higher penalties, reinforcing the IRS’s strict enforcement on tax compliance for foreign investors in U.S. partnerships.

Partnerships (Multi-Member LLCs) - Form 1065: U.S. Return of Partnership Income

What Is It About?

This relates to multi-member LLCs and partnerships, which must file Form 1065 with the IRS to report their income, deductions, and other financial details.

• Partnerships and multi-member LLCs don’t pay income tax directly; instead, income is passed through to the partners, who report it on their personal tax returns.

• Failure to file or errors in reporting can result in significant penalties, including fines and even criminal charges for intentional violations.

Penalties:

• Failure to File the Form – $235 per partner, per month (up to a maximum of 12 months).

• Incorrect or Incomplete Information – Up to $280 per error.

• Willful Noncompliance – Up to 5 years in prison and a fine of $250,000 for individuals or $500,000 for corporations (26 USC § 7201).

Entities with Domestic Partners That Want to Be S Corps

• Form 2553 – Election by a Small Business Corporation

This refers to business entities with domestic (U.S.) partners that want to elect S Corporation (S Corp) status for tax purposes.

• Form 2553 is filed with the IRS to elect S Corporation status, which allows a corporation to be taxed as a pass-through entity (avoiding double taxation).

• Only domestic corporations and eligible entities can make this election.

• The election must generally be made by March 15 for it to apply to the current tax year.

Partnerships and S Corporations (All) - Schedule K-1 – Partner’s/S Shareholder’s Share of Income, Deductions, Credits, Etc.

Penalties:

• Failure to provide Schedule K-1 to partners/shareholders – $310 per partner/shareholder.

What Is This About?

• Schedule K-1 reports each partner’s or S Corp shareholder’s share of income, deductions, and credits.

• It is essential for pass-through entities since they do not pay taxes at the entity level; instead, income passes through to the partners/shareholders.

Why Is This Important?

• Partners and shareholders need Schedule K-1 to correctly file their personal tax returns.

• Not providing it on time can result in IRS penalties and delays in tax filings.

• Accuracy is crucial, as errors may trigger IRS audits or additional fines.

Partnerships and S Corporations (Specific Cases)

• Form 7208 – Excise Tax on Corporate Stock Repurchases

• Form 8918 – Material Advisor Disclosure Statement

• Form 3800 – General Business Credit (Energy Investment, Disability Access, etc.)

• Form 1125-A – Cost of Goods Sold (For Businesses with Inventory)

What Is This About?

These forms apply to specific tax situations for partnerships and S corporations:

• Form 7208 reports the 1% excise tax on corporate stock buybacks. This applies mainly to publicly traded companies repurchasing their own shares.

• Form 8918 is used by tax advisors who design or promote certain tax-advantaged transactions—it’s a compliance requirement for advisors, not businesses themselves.

• Form 3800 consolidates various tax credits for businesses, including energy-efficient investments, research and development, and hiring certain employees (e.g., disabled individuals).

• Form 1125-A is required for businesses that sell physical products and maintain inventory, as it calculates the Cost of Goods Sold (COGS), impacting taxable income.

Why Is This Important?

• Stock buybacks (Form 7208) can trigger excise taxes, affecting corporate financial strategies.

• Material tax advisors (Form 8918) must disclose their involvement in complex tax planning, ensuring transparency.

• General business credits (Form 3800) can reduce tax liability for businesses investing in sustainability, employment, and innovation.

• Inventory-based businesses (Form 1125-A) must accurately report COGS to determine gross income and taxable profit.

Partnerships and S Corporations with Foreign Assets

• FBAR (Form 114) – Report of Foreign Financial Accounts (Civil penalty starting at $10,000 or 50% of the account value, up to 10 years in prison)

• Form 8938 – Statement of Specified Foreign Financial Assets (Civil penalty up to $50,000 and 40% of unpaid tax, IRC § 6038)

• Form 8858 – Information Return of U.S. Persons with Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs) (Same penalty as Form 8938)

• Form 8865 – Return of U.S. Persons with Respect to Certain Foreign Partnerships (Same penalty as Form 8938)

• Form 8621 – Information Return by a Shareholder of a Passive Foreign Investment Company (PFIC) or Qualified Electing Fund (No direct penalty)

• Form 5471 – Information Return of U.S. Persons with Respect to Certain Foreign Corporations (Same penalty as Form 8938)

What Is This About?

These forms are used by U.S. partnerships and S corporations that own foreign financial accounts, assets, or interests in foreign entities.

• FBAR (Form 114) is required if total foreign financial accounts exceed $10,000 at any time during the year. Severe penalties apply for noncompliance.

• Form 8938 is for reporting foreign financial assets if they exceed IRS thresholds.

• Forms 8858, 8865, and 5471 are for U.S. persons or entities with ownership in foreign entities (disregarded entities, partnerships, or corporations).

• Form 8621 is used for Passive Foreign Investment Companies (PFICs) but does not have a direct penalty.

Why Is This Important?

• Failure to report foreign accounts or assets can lead to severe IRS penalties, including high fines and potential criminal charges.

• Certain thresholds apply, so not all entities must file all forms.

• These forms ensure compliance with U.S. tax laws and foreign asset reporting requirements under FATCA and FBAR regulations.

S Corporations

• Form 1120-S – U.S. Income Tax Return for an S Corporation

• Form 1125-E – Compensation of Officers

• Section 7203 – Limitations on Shareholder Stock and Debt Basis in an S Corporation

Note: The penalties applicable are the same as for Form 1065.

These forms are used by S Corporations (S Corps) to report their income, officer compensation, and shareholder basis limitations:

• Form 1120-S: The main tax return for S Corporations, reporting income, deductions, and credits.

• Form 1125-E: Required if total officer compensation exceeds $500,000, detailing payments to corporate officers.

• Section 7203: Rules that limit a shareholder’s ability to deduct losses based on their stock and debt basis in the S Corp.

Penalties:

• Since S Corps are pass-through entities, the penalties for failing to file are the same as for partnerships (Form 1065):

  • $235 per shareholder, per month (up to 12 months) for late filing.

  • Up to $280 per error for incorrect or incomplete information.

  • Intentional noncompliance – Up to 5 years in prison and fines up to $250,000 for individuals or $500,000 for corporations.

Partnerships and S Corporations with Foreign Activities

• Schedule K-2 – Items of Partner’s Distributive Share – International

• Schedule K-3 – Partner’s Share of Income, Deductions, Credits, etc. – International

What Is This About?

These schedules apply to partnerships and S corporations that have foreign activities, foreign partners/shareholders, or international tax items.

• Schedule K-2: Expands the international tax reporting for partnerships and S corporations, detailing foreign income, taxes, and deductions.

• Schedule K-3: Provides each partner/shareholder’s share of international income, deductions, and credits, helping them comply with U.S. international tax laws.

Why Is This Important?

• These schedules ensure that U.S. taxpayers correctly report foreign income and tax credits.

• They align with IRS and foreign tax compliance rules, such as Foreign Tax Credit (FTC) calculations.

• Failure to file accurately can lead to penalties and IRS audits.

Partnerships and S Corporations with Real Estate

• Form 4562 – Depreciation and Amortization (Includes Information on Listed Property)

• Form 4797 – Sales of Business Property

• Form 8825 – Rental Real Estate Income and Expenses of a Partnership or S Corporation

• Forms 8996 & 8997 – Qualified Opportunity Fund (QOF) Reporting

• Form 7205 – Deduction for Energy-Efficient Commercial Buildings

What Is This About?

These forms are used by partnerships and S corporations that own, rent, or sell real estate.

• Form 4562 reports depreciation and amortization of business assets, including real estate improvements and equipment.

• Form 4797 is used for reporting sales or exchanges of business property, including real estate used in a trade or business.

• Form 8825 tracks rental real estate income and expenses for partnerships and S corporations.

• Forms 8996 & 8997 relate to Qualified Opportunity Funds (QOFs), which provide tax incentives for investing in designated Opportunity Zones.

• Form 7205 allows deductions for commercial buildings that meet high energy efficiency standards, promoting sustainability in real estate investments.

Why Is This Important?

• Depreciation deductions (Form 4562) can help reduce taxable income.

• Selling commercial property (Form 4797) may have capital gains tax implications.

• Rental income and expenses (Form 8825) must be accurately reported for tax compliance.

• QOF investments (Forms 8996 & 8997) can defer or reduce capital gains taxes.

• Energy-efficient buildings (Form 7205) can qualify for additional tax deductions.

Partnerships and S Corporations Extension

• Form 7004 – Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns

What Is This About?

Form 7004 is used by partnerships and S corporations to request an automatic extension for filing certain tax returns.

• This does not extend the time to pay taxes owed—it only extends the filing deadline.

• The typical extension period is 6 months, meaning most business tax returns can be filed later without penalties for late filing.

Why Is This Important?

• Helps businesses avoid late-filing penalties if they need more time to prepare their returns.

• Applies to various business tax returns, including Forms 1065 (partnerships) and 1120-S (S corporations).

• Must be filed before the original tax deadline (usually March 15 for calendar-year businesses).

Payers to Foreign Persons

• Form 1042-S – U.S. Source Income of a Foreign Person Subject to Withholding

• Form 1042 – Annual Tax Return for U.S. Withholding Tax on Income of Foreign Persons

• Form 1042-T – Annual Summary and Transmittal of Forms 1042-S

Extension

• Form 8809 – Application for Extension of Time to File Information Returns

What Is This About?

These forms are used by U.S. entities making payments to foreign individuals or businesses. They report income subject to withholding tax and ensure compliance with U.S. tax laws.

• Form 1042-S is issued to foreign recipients to report income sourced from the U.S., including interest, dividends, royalties, and compensation.

• Form 1042 is filed annually by withholding agents (such as businesses or financial institutions) to report taxes withheld on payments to foreign persons.

• Form 1042-T summarizes and transmits all 1042-S forms submitted by a business.

• Form 8809 allows businesses to request extra time to file these reports.

Why Is This Important?

• Failure to file or withhold properly can result in penalties and interest.

• The IRS monitors these transactions closely to prevent tax evasion through foreign accounts.

• Withholding agents (employers, banks, corporations) must ensure they collect and remit the correct tax amounts to avoid liability.

Penalties for Form 1042

• 5% of the unpaid tax balance per month of delay, up to a maximum of 25%. (IRC § 6651(a)(1))

• 0.5% of the unpaid balance per month of delay, up to a maximum of 25%. (IRC § 6651(a)(2))

• $330 penalty per Form 1042-S not filed.

• $630 or 10% of the unreported payment amount for willful noncompliance. (IRC § 6721)

• Up to 5 years in prison and a fine of $250,000 for individuals or $500,000 for corporations for tax fraud. (IRC §§ 7201-7206)

These penalties apply to U.S. withholding agents who fail to file, pay, or report correctly when dealing with foreign payees under Form 1042 and 1042-S.

Key Risks:

• Late filing of Form 1042 triggers a 5% penalty per month, maxing out at 25% of the unpaid tax.

• Late payment of tax incurs a 0.5% penalty per month, also maxing out at 25%.

• Failure to file Form 1042-S results in a $330 fine per form.

• Willful failure to report payments can lead to severe fines or even criminal charges.

• Intentional tax evasion can result in prison time and substantial fines.

Annual Reports

• New Mexico: LLPs and Corporations

• South Carolina: Corporations

• Vermont: Corporations and LLCs

These are annual report filing requirements for business entities in specific U.S. states.

• Most states require corporations, LLCs, and LLPs to file an annual or biennial report to maintain good standing.

• New Mexico requires LLPs and corporations to comply with state reporting obligations.

• South Carolina mandates corporations to submit their reports.

• Vermont requires both corporations and LLCs to file annual reports.

Monthly Deposits

• 1042 – Annual Return for Withholding Tax on U.S.-Source Income of Foreign Persons.

• 945 – Annual Return for Federal Income Tax Withheld.

• 720 – Quarterly Federal Excise Tax Return.

• 941 – Employer’s Quarterly Federal Tax Return.

This refers to monthly tax deposit requirements for withholding agents and employers in the U.S. who are responsible for:

1. Withholding and remitting taxes on payments to foreign persons (Form 1042).

2. Withholding federal income tax on certain nonpayroll payments (Form 945).

3. Reporting and paying excise taxes (Form 720).

4. Submitting employer payroll taxes (Form 941).

Key Compliance Points:

• Form 1042 applies to foreign income withholding and is filed annually.

• Form 945 covers federal income tax withholding on nonpayroll payments.

• Form 720 reports excise taxes (e.g., fuel, tobacco, air transportation).

• Form 941 reports employment taxes (Social Security, Medicare, and withheld income tax) on a quarterly basis.

Penalties for Deposits

• Civil Penalty: Up to 100% of the Amount Owed (IRC § 6656).

• Criminal Penalty: Up to 5 years of imprisonment (IRC § 7201).

• Interest: 7% annually for the first quarter.

These are penalties for late or incorrect federal tax deposits related to withholding, payroll, or excise taxes.

• IRC § 6656: Imposes a civil penalty for failing to timely deposit employment or withholding taxes. The penalty ranges from 2% to 15%, but in cases of fraud or willful failure, it can reach 100% of the unpaid amount (known as the Trust Fund Recovery Penalty).

• IRC § 7201: Covers criminal tax evasion, leading to up to 5 years of imprisonment and/or substantial fines.

• Interest Rate: The IRS adjusts the interest rate quarterly. The 7% rate applies to Q1, but it may change throughout the year.

Florida Resellers - DR-15

Florida Sales Tax Return, including transient rentals.

This relates to Florida businesses that resell goods or rent transient properties (short-term rentals).

• The DR-15 form is used to report and pay Florida sales tax on taxable transactions, including resale sales and short-term rentals.

• Businesses that fail to file or pay correctly may face civil and criminal penalties.

Penalties:

• Criminal Penalty: Up to 5 years in prison (Fla. Stat. 212(2)).

• Civil Penalty: Up to 10% of the amount owed (Fla. Stat. 212).

Form 4070, "Employee's Report of Tips to Employer," is typically submitted monthly by employees who receive tips.

Key Points on Filing Frequency:

• The form must be submitted by the 10th day of each month for the tips received in the previous month.

• For example, tips earned in March must be reported by April 10th.

• If the 10th falls on a weekend or holiday, the due date moves to the next business day.

Who Needs to File?

Employees who receive $20 or more in tips per month must report them to their employer using Form 4070.

Would you like more details on employer responsibilities regarding tip reporting?

If you received $20 or more in tips during previous month, report them to your employer. You can use Form 4070.

Employers of Tipped Employees Must Request the Employee’s Tip Report to the Employer.

PENALTY.

• 20% Accuracy-Related Penalty – IRC Sec. 6662

• Up to 25% for Late Payment – IRC Sec. 6651

• Up to 5 Years in Prison for Fraud – IRC Sec. 7201-7203 & 18 USC Sec. 371

Form 4070, "Employee's Report of Tips to Employer," is typically submitted monthly by employees who receive tips.

Key Points on Filing Frequency:

• The form must be submitted by the 10th day of each month for the tips received in the previous month.

• For example, tips earned in March must be reported by April 10th.

• If the 10th falls on a weekend or holiday, the due date moves to the next business day.

Who Needs to File?

Employees who receive $20 or more in tips per month must report them to their employer using Form 4070.

Would you like more details on employer responsibilities regarding tip reporting?

If you received $20 or more in tips during previous month, report them to your employer. You can use Form 4070.

Employers of Tipped Employees Must Request the Employee’s Tip Report to the Employer.

PENALTY.

• 20% Accuracy-Related Penalty – IRC Sec. 6662

• Up to 25% for Late Payment – IRC Sec. 6651

• Up to 5 Years in Prison for Fraud – IRC Sec. 7201-7203 & 18 USC Sec. 371

Form 4070, "Employee's Report of Tips to Employer," is typically submitted monthly by employees who receive tips.

Key Points on Filing Frequency:

• The form must be submitted by the 10th day of each month for the tips received in the previous month.

• For example, tips earned in March must be reported by April 10th.

• If the 10th falls on a weekend or holiday, the due date moves to the next business day.

Who Needs to File?

Employees who receive $20 or more in tips per month must report them to their employer using Form 4070.

Would you like more details on employer responsibilities regarding tip reporting?

If you received $20 or more in tips during previous month, report them to your employer. You can use Form 4070.

Employers of Tipped Employees Must Request the Employee’s Tip Report to the Employer.

PENALTY.

• 20% Accuracy-Related Penalty – IRC Sec. 6662

• Up to 25% for Late Payment – IRC Sec. 6651

• Up to 5 Years in Prison for Fraud – IRC Sec. 7201-7203 & 18 USC Sec. 371

Form 4070, "Employee's Report of Tips to Employer," is typically submitted monthly by employees who receive tips.

Key Points on Filing Frequency:

• The form must be submitted by the 10th day of each month for the tips received in the previous month.

• For example, tips earned in March must be reported by April 10th.

• If the 10th falls on a weekend or holiday, the due date moves to the next business day.

Who Needs to File?

Employees who receive $20 or more in tips per month must report them to their employer using Form 4070.

Would you like more details on employer responsibilities regarding tip reporting?

If you received $20 or more in tips during previous month, report them to your employer. You can use Form 4070.

Employers of Tipped Employees Must Request the Employee’s Tip Report to the Employer.

PENALTY.

• 20% Accuracy-Related Penalty – IRC Sec. 6662

• Up to 25% for Late Payment – IRC Sec. 6651

• Up to 5 Years in Prison for Fraud – IRC Sec. 7201-7203 & 18 USC Sec. 371

Form 4070, "Employee's Report of Tips to Employer," is typically submitted monthly by employees who receive tips.

Key Points on Filing Frequency:

• The form must be submitted by the 10th day of each month for the tips received in the previous month.

• For example, tips earned in March must be reported by April 10th.

• If the 10th falls on a weekend or holiday, the due date moves to the next business day.

Who Needs to File?

Employees who receive $20 or more in tips per month must report them to their employer using Form 4070.

Would you like more details on employer responsibilities regarding tip reporting?

If you received $20 or more in tips during previous month, report them to your employer. You can use Form 4070.

Employers of Tipped Employees Must Request the Employee’s Tip Report to the Employer.

PENALTY.

• 20% Accuracy-Related Penalty – IRC Sec. 6662

• Up to 25% for Late Payment – IRC Sec. 6651

• Up to 5 Years in Prison for Fraud – IRC Sec. 7201-7203 & 18 USC Sec. 371

Form 4070, "Employee's Report of Tips to Employer," is typically submitted monthly by employees who receive tips.

Key Points on Filing Frequency:

• The form must be submitted by the 10th day of each month for the tips received in the previous month.

• For example, tips earned in March must be reported by April 10th.

• If the 10th falls on a weekend or holiday, the due date moves to the next business day.

Who Needs to File?

Employees who receive $20 or more in tips per month must report them to their employer using Form 4070.

Would you like more details on employer responsibilities regarding tip reporting?

If you received $20 or more in tips during previous month, report them to your employer. You can use Form 4070.

Employers of Tipped Employees Must Request the Employee’s Tip Report to the Employer.

PENALTY.

• 20% Accuracy-Related Penalty – IRC Sec. 6662

• Up to 25% for Late Payment – IRC Sec. 6651

• Up to 5 Years in Prison for Fraud – IRC Sec. 7201-7203 & 18 USC Sec. 371

Form 4070, "Employee's Report of Tips to Employer," is typically submitted monthly by employees who receive tips.

Key Points on Filing Frequency:

• The form must be submitted by the 10th day of each month for the tips received in the previous month.

• For example, tips earned in March must be reported by April 10th.

• If the 10th falls on a weekend or holiday, the due date moves to the next business day.

Who Needs to File?

Employees who receive $20 or more in tips per month must report them to their employer using Form 4070.

Would you like more details on employer responsibilities regarding tip reporting?

If you received $20 or more in tips during previous month, report them to your employer. You can use Form 4070.

Employers of Tipped Employees Must Request the Employee’s Tip Report to the Employer.

PENALTY.

• 20% Accuracy-Related Penalty – IRC Sec. 6662

• Up to 25% for Late Payment – IRC Sec. 6651

• Up to 5 Years in Prison for Fraud – IRC Sec. 7201-7203 & 18 USC Sec. 371

Form 4070, "Employee's Report of Tips to Employer," is typically submitted monthly by employees who receive tips.

Key Points on Filing Frequency:

• The form must be submitted by the 10th day of each month for the tips received in the previous month.

• For example, tips earned in March must be reported by April 10th.

• If the 10th falls on a weekend or holiday, the due date moves to the next business day.

Who Needs to File?

Employees who receive $20 or more in tips per month must report them to their employer using Form 4070.

Would you like more details on employer responsibilities regarding tip reporting?

If you received $20 or more in tips during previous month, report them to your employer. You can use Form 4070.

Employers of Tipped Employees Must Request the Employee’s Tip Report to the Employer.

PENALTY.

• 20% Accuracy-Related Penalty – IRC Sec. 6662

• Up to 25% for Late Payment – IRC Sec. 6651

• Up to 5 Years in Prison for Fraud – IRC Sec. 7201-7203 & 18 USC Sec. 371