On February 2, 2018, the U.S. Bureau of Economic Analysis (BEA) released a mandatory survey of transactions between U.S.-based persons and non-U.S. persons involving a very broad range of intellectual property (IP) and services transactions that were conducted during the 2017 fiscal year. The final rule, effective March 5, will require that all covered U.S. companies and individuals, regardless of whether they are contacted by the BEA regarding the survey, submit responses by June 29, 2018, or they may be subject to civil and criminal penalties. For respondents using the BEA’s eFile system, responses are due on July 30, 2018.

Background

BEA, the statistical division of the U.S. Department of Commerce (DOC), is tasked with collecting a wide range of economic and industry data, preparing economic statistics from such data, and providing publicly available macroeconomic analyses. Like the other benchmark surveys that it conducts, the BEA generally issues the BE-120 survey every five years.

The BE-120 survey requires U.S. companies and individuals that had sales to foreign persons or purchases from foreign persons in the services and IP categories covered by the survey during the U.S. person’s 2017 fiscal year to submit either a full or abbreviated response. U.S. persons with combined sales to foreign persons of covered IP or services that exceed $2 million during 2017, and U.S. persons whose combined purchases of covered IP or services from foreign persons exceeded $1 million during the same period, must provide full survey responses, including data on their total sales or purchases by foreign country. U.S. persons who had combined sales and purchases less than the applicable dollar thresholds will be required to submit abbreviated responses.

Examples of the types of IP transactions covered by the survey include sales and purchases of IP rights related to industrial processes and products, as well as sales and purchases of trademarks, digital recordings, and computer software (including end-user licenses and customization services). Examples of covered services include cloud computing, advertising, engineering services, accounting and auditing services, legal services, computer and data processing services, research and development services, telecommunications services, agricultural services, construction services, engineering services and mining services. For a complete list of covered transactions, please refer to the Federal Register notice available at 83 Fed. Reg. 4834.

Penalties for Noncompliance

Individuals or companies that fail to submit timely responses to the BE-120 benchmark survey may be subject to a fine of between $2,500 and $25,000. In cases where non-compliance is willful, criminal penalties of up to $10,000 and one year of imprisonment may be imposed.