Mandatory Report re: IP, Services Obtained from or Provided to Foreign Persons Due July 30

Davis Wright Tremaine LLP

Davis Wright Tremaine LLP

The BE-120 Benchmark Survey of Transactions in Selected Services and Intellectual Property with Foreign Persons is conducted every five years by the Bureau of Economic Analysis of the U.S. Department of Commerce. A BE-120 report is required of each U.S. Person that had sales to foreign persons, or purchases from foreign persons, in the services and intellectual property categories covered by the survey during the U.S. Person’s 2017 fiscal year. There is no de minimis dollar sales volume threshold for reporting. The deadline for filing using BEA’s eFile system is July 30, 2018. All persons who are subject to the reporting requirements are required to submit a completed survey whether or not they have been contacted by BEA.

For purposes of survey reporting requirements, “U.S. Person” is defined as any person resident in the United States or subject to the jurisdiction of the United States – including individuals, corporations, partnerships, LLCs, LLPs, branches, associations, estates, trusts, governments and other organizations (whether or not organized under the laws of any State). “Foreign Person” refers to a person resident outside of the U.S. or subject to the jurisdiction of a country other than the United States.

The survey covers sales, purchases and other transactions between U.S. companies and foreign persons related to intellectual property rights, including, for example:

  • patents, trademarks, trade secrets and other intellectual property
  • books, recordings, live  and recorded performances and events
  • digital content
  • broadcasts
  • reproduction, distribution or sale of software, including end-user licenses and customization services

The survey also covers sales and purchases between U.S. companies and Foreign Persons of a very broad range of other services, including, for example:

  • Accounting, auditing, and bookkeeping services;
  • Advertising services;
  • Agricultural services;
  • Architectural services;
  • Artistic-related services;
  • Audiovisual and production services;
  • Auxiliary insurance services;
  • Business format franchising
  • Cloud computing and data storage services, and other computer services;
  • Construction services;
  • Contract manufacturing services;
  • Customized and non-customized research and development services, and other R & D services
  • Disbursements for sales promotion and representation;
  • Education services;
  • Engineering, surveying, cartography, certification, testing and technical inspection services;
  • Financial services;
  • Health services;
  • Heritage and recreational services;
  • Installation, alteration, and training services;
  • Legal services;
  • Maintenance services;
  • Market research services;
  • Merchanting services
  • Mining services; 
  • News agency services and other information services;
  • Operational leasing;
  • Other management, consulting, and public relations services;
  • Photographic services (including satellite photography services);
  • Premiums paid, and losses recovered, on primary insurance;
  • Public opinion polling services;
  • Space transport services;
  • Telecommunications services;
  • Trade exhibition and sales convention services;
  • Trade-related services, other than merchanting services;
  • Waste treatment and depollution services
  • Other selected services not included elsewhere.

A complete list of covered services can be found in the General Instructions to Form BE-120.

Excluded from the survey are the following:

  • Sales and purchases of goods, i.e., products that have a physical form, including payments or receipts for electricity. 
  • Sales and purchases of financial instruments, including stocks, bonds, financial derivatives, loans, mutual fund shares, and negotiable CDs. (However, securities brokerage is a service).
  • Income on financial instruments (interest, dividends, capital gain distributions, etc).
  • Compensation paid to, or received by, employees.
  • Penalties and fines, and gifts or grants in the form of goods and cash (sometimes called “transfers”).

The federal law requiring reporting on BEA’s services surveys protects the confidentiality of the data that companies report. BEA is prohibited from granting another agency access to the data for tax, investigative or regulatory purposes, and data reported on BEA’s surveys are not subject to Freedom of Information Act requests.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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