Vermont Bar Journal, Vol. 40, No. 2 Spring 2015, Vol. 41, No. 1 | Page 21

10. Investment Survey,
Agricultural Land Reporting

The 1976 International Investment Survey Act authorized the US government to
engage in a foreign direct investment survey. Foreign direct investment (FDI) reporting was suspended in 2009 but reinstated
by a Bureau of Economic Affairs Notice dated November 26, 2014. This reporting requirement applies to a variety of FDIs (acquisitions, investments, expansions). BE-13
forms are used for this report, which exact
form to use depending on the type of FDI.
For example, BE-13A is used for an acquisition. The purpose of this law is to collect
information, but the penalty for a failure to
file is not less than $2,500 nor more than
$32,500. This declaration must be made by
any business located in the United States
when a foreign person owns or acquires at
least 10% of the voting rights in the enterprise, whether directly or indirectly, and the
total cost of the acquisition is more than $3
million.
The Agricultural Foreign Investment Disclosure Act of 1978 imposes a similar reporting obligation on any foreign person
who acquires, sells, or holds, directly or
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indirectly, agricultural land in the United
States. The declaration is made on Form
FSA-153, which is sent to the Department
of Agriculture’s Farm Services Agency. The
triggers should be examined by the Vermont attorney for the buyer whenever a
foreign person acquires Vermont land. For
example, the form must be filed when an
acquisition is made of more than ten acres
of land, within ninety days following the
conclusion of the transaction
As is frequently the case in the international arena, the penalty is vastly disproportionate to the objects sought to be attained by the legislation. The civil penalty
cannot exceed 25% of the fair market value
of the land acquired on the date that the
penalty is imposed.9
Finally, it bears mentioning that the Internal Revenue Code contains a variety of foreign disclosure provisions that could apply
to your Vermont clients. In particular, IRS
Form 5472 must be filed by a US taxpayer
that acquires or holds an interest in a foreign company.

International Tax Rules Frequently Encountered in Vermont

that prior to the date of expatriation the
NRA was an LPR during at least eight of the
last fifteen years. A US citizen who renounces his US nationality is a covered expatriate
in all cases. Fortunately, the exit tax is designed to reach only those individuals with
earnings and net worth sufficient to allow
them to engage your services to plan for
this tax. The exit tax is imposed if the departing individual (i) has an annual tax liability of about $152,000 (2014 figures) for
the five years preceding the date of expatriation, (ii) has over $2 million in net worth,
or (iii) fails to certify that he or she has complied with all US federal tax obligations in
the preceding five years.
We have been asked to handle a few expatriation cases and plan for this tax regime. For example, many UK, French, German, or Bermudian university students
achieved US citizenship at their birth in the
home country because they had a US citizen parent. It is not unrealistic to assume
that no one in their home country has informed them of their US income tax obligations, and they have often failed to file any
income tax returns on their worldwide income despite working abroad. Some may
discover this lapse when they are hired for
a financial service job that requires their
tax returns be prepared by a US accounting firm, which then notices their US citizenship. If this individual then files I-407 at
the US consulate to renounce US citizenship, the exit tax nevertheless applies due
to the simple fact of their previous noncompliance.

With the recent increase in international
commerce and trade, these are the ten issues that we most frequently encounter in
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