We all love to quote statistics when they tend to support whatever position we may be advocating. At the same time, however, we are often loath to take the time and effort to respond to surveys or provide information needed to create reliable statistics. That is especially true when the purpose and use of those statistics are not readily apparent.
In June, we alerted our clients and friends that the US Commerce Department’s Bureau of Economic Analysis (BEA) had extended a deadline for the filing of a BE-10 form. We noted that the BEA prepares economic statistics that purport to help gauge the performance of the US economy and the role of the US in the global economy. The BEA conducts seven mandatory surveys on US direct investment abroad and foreign direct investment in the US. Failure to submit required surveys may result in civil fines of up to $25,000. Willful failures to report can result in criminal fines and penalties, including imprisonment of up to one year. So the BEA is pretty serious about its statistics!
The BEA’s website clearly recites the BEA’s mission, vision, values and role. Its one-line mission statement is: “The BEA promotes a better understanding of the US economy by providing the most timely, relevant, and accurate economic accounts data in an objective and cost-effective manner.” The BEA’s modest vision is to be the world’s most respected producer of economic accounts. Not bad for an agency of the Department of Commerce. Even Donald Trump would be proud. In fact, the BEA’s website proudly proclaims that “the cornerstone of BEA’s statistics is the national income and product accounts (NIPAs), which feature the estimates of gross domestic product (GDP) and related measures.” And, further, it announces that the GDP was recognized by the Department of Commerce as its “greatest achievement of the 20th century.” Wow, who knew?
Recently, the BEA released the final version of the BE-180 report. The BE-180 is yet another five-year benchmark survey, this one used to collect data on transactions between US persons that are financial services providers and non-US persons. The final rule issued by the BEA requiring the report became effective on June 19, 2015, and the form is now available online.
All US individuals or entities that are “financial services providers” and that meet the reporting requirements must file a BE-180 report. A financial services provider includes, without limitation, a party that provides: (i) brokerage services related to equity transactions; (ii) other brokerage services; (iii) underwriting and private placement services; (iv) financial management services; (v) credit-related services; (vi) credit card services; (vii) financial advisory and custody services; (viii) securities lending services; (ix) electronic funds transfer services; or (x) other financial services. The BEA has stated that investment managers of hedge funds, private equity funds and other private funds and separate accounts are financial services providers. Financial services providers also include broker-dealers. This would include captive, affiliated or “in-house” limited purpose broker-dealers which, for example, sell interests in a manager’s funds. Persons subject to the reporting requirements of BE-180 are required to respond whether or not they are contacted by the BEA.
A BE-180 report is required from each US person that is a financial services provider that (i) had sales or purchases of financial services with non-US persons in excess of $3 million for fiscal year 2014 (the Reporting Threshold); or (ii) has been contacted by the BEA, even if the Reporting Threshold is not met. For example, a US party that received more than $3 million of management fees from its non-US clients for investment management services in 2014 will be required to file a BE-180 report. Broker-dealers (including placement agents) that received fees in connection with placement services to non-US investors also would be required to report on BE-180, if the Reporting Threshold is satisfied.
The BEA has indicated that if a US person that is a financial services provider has not been contacted by the BEA, and sales and purchases of financial services to non-US persons do not meet the Reporting Threshold, such US person is not required to file a BE-180 report but may provide data voluntarily.
The BEA encourages US Reporters to file the BE-180 by the October 1, 2015 due date stated on the form. However, because the BEA claims to recognize “the burden imposed by this and other BEA surveys with 2015 filing deadlines,” the BEA is providing extensions of the BE-180 due date. If the US Reporter was notified of the BE-180 survey by BEA and has a BE-180 identification number below 140012490, such US Reporter can claim an automatic extension and file no later than November 1, 2015. If the US Reporter was notified of the BE-180 survey by BEA and has a BE-180 identification number above 140012490, such US Reporter can claim an automatic extension and file no later than December 1, 2015. And, if the US Reporter was NOT notified of the BE-180 survey by BEA and does NOT have a BE-180 identification number, such US Reporter can claim an automatic extension and file no later than November 1, 2015. The BEA will consider granting additional extensions to the filing deadline if a request is submitted by November 1, 2015.
Although it is unlikely that the information obtained by the BE-180 will be hailed as the greatest achievement of the 21st century, hopefully the benefits derived from the BE-180 survey will justify the burdens imposed on those financial services providers that are required to report. Please contact us for assistance regarding your BE-180 reporting requirements.