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Old 07-23-2014, 08:35 AM
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Join Date: Jul 2014
Posts: 2
WY LLC non-US person non-US resident no US operations/income

Just want to ask a couple of questions regarding my situation:
  • Sole member of a WY LLC
  • Non-US person
  • Non-US resident
  • No US operations, income, office or any assets
  • Country where business activity is has tax treaty with the USA

Am I liable to pay any US taxes?
And if not, do I have to file to the IRS at all?

I found this old posting on taxforum.us to a similar case:

LLC (single-member, nonresident) reporting requirements. - Tax Forum - Payroll, Accounting and Tax Help Forum

Where the answer from the expert was:

Your LLC is not taxable entity. Income /loss is passed through to you a member, and you pay taxes as individual. You, as a non-US resident, are not liable for US income tax for income derived outside of the US and passive income derived from the US, such as interest income, dividend income and capital gains. Therefore, you are not liable for any US income taxes, when your LLC conducts business outside of US. If an US LLC trades with US companies from outside of US, such LLC does not conduct business in US. Only presence of permanent establishments of the LLC in US, such as offices, warehouses, etc., allows to classify such LLC as a LLC conducting business in US. No income tax return required as long as your LLC conducts a trade or business outside of the US, and you are are non-US residents for income tax purposes.

Could anyone validate that this advice applies?

Many thanks.



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Old 07-24-2014, 10:38 AM
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Join Date: Oct 2010
Posts: 5,139
Quote:
Originally Posted by valuenaut View Post
Just want to ask a couple of questions regarding my situation:
  • Sole member of a WY LLC
  • Non-US person
  • Non-US resident
  • No US operations, income, office or any assets
  • Country where business activity is has tax treaty with the USA

Am I liable to pay any US taxes?
And if not, do I have to file to the IRS at all?

I found this old posting on taxforum.us to a similar case:

LLC (single-member, nonresident) reporting requirements. - Tax Forum - Payroll, Accounting and Tax Help Forum

Where the answer from the expert was:

Your LLC is not taxable entity. Income /loss is passed through to you a member, and you pay taxes as individual. You, as a non-US resident, are not liable for US income tax for income derived outside of the US and passive income derived from the US, such as interest income, dividend income and capital gains. Therefore, you are not liable for any US income taxes, when your LLC conducts business outside of US. If an US LLC trades with US companies from outside of US, such LLC does not conduct business in US. Only presence of permanent establishments of the LLC in US, such as offices, warehouses, etc., allows to classify such LLC as a LLC conducting business in US. No income tax return required as long as your LLC conducts a trade or business outside of the US, and you are are non-US residents for income tax purposes.

Could anyone validate that this advice applies?

Many thanks.
Non-US person•Non-US resident•No US operations, income, office or any assets•Country where business activity is has tax treaty with the USA, you are not subject to US taxes; however, ====>>>>>> The personal service articles in tax treaties do not apply to corporations. (These articles only apply when individuals are the beneficial owners of the income.) The foreign corporation may still be exempt from tax under the Business Profits Article or the Permanent Establishments Article (treaty titles vary).In order to qualify for a treaty exemption under the business profits article, the corporation cannot have a permanent establishment in the US; must have an EIN ;must otherwise qualify for the business profits article; must provide a W-8BEN (signed, with Parts I and II completed); must not be a personal holding company

• Am I liable to pay any US taxes?=============>>>>>>>I guess it depends. Aslongas you are a foreign company, LLC, and has no presence in the US. You are not subject to US taxes(no ned to submist W8Ben).Income that is effectively connected with a U.S. trade or business is often connected with the fact that the foreign corporation has a fixed base or permanent establishment in the U.S. (i.e. it has some sort of permanent office, factory, base of operations, etc., in the U.S. from which it generates its U.S. income).then,Income of a foreign corporation that is effectively connected with a U.S. trade or business is subject to withholding at the same rates applicable to US taxpayers. Say, if your LLC in WY’s employees are providing the training, the fees are effectively connected income ,ECI subject to US taxes to the IRS.
ORif you have income that is not effectively connected with a US trade or business is classified as fixed, determinable, annual or periodical income, then.FDAP income that is considered to be US sourced income is subject to 30% withholding or withholding at a lower treaty rate(you need to submit W8Ben)
, is reportable on a 1042 and 1042-S; foreign corporation must submit a Form 1120F tax return; if the FDAP income that is not US sourced income , then it is not reportable by the US withholding agent
not subject to any withholding tax
And if not, do I have to file to the IRS at all?========>>>>No unless you have US soirce income as mentioned above.

I found this old posting on taxforum.us to a similar case:

LLC (single-member, nonresident) reporting requirements. - Tax Forum - Payroll, Accounting and Tax Help ForumWhere the answer from the expert was:

Your LLC is not taxable entity. Income /loss is passed through to you a member, and you pay taxes as individual. You, as a non-US resident, are not liable for US income tax for income derived outside of the US and passive income derived from the US, such as interest income, dividend income and capital gains. Therefore, you are not liable for any US income taxes, when your LLC conducts business outside of US. If an US LLC trades with US companies from outside of US, such LLC does not conduct business in US. Only presence of permanent establishments of the LLC in US, such as offices, warehouses, etc., allows to classify such LLC as a LLC conducting business in US. No income tax return required as long as your LLC conducts a trade or business outside of the US, and you are are non-US residents for income tax purposes.========>>>>>>>This posting is accurate aslongas your LLC(SMLLC) operated outside the US.I mean this is NOT your case. As mentioned above, aslongas your LLC operates overseas (outside the US), you do not even need to submit W8BEN to your withholding entity in US(if you want, you may do it ;no penalty in filing W8BEN). However, your presence uis in US you are physically present in US so once you earn ECI in US, then you must file tax return with the IRS/your state. On How Foreign Entity in WY state is Taxed, you need to contact Dept of Rev of WY. I guess tax laws vary from state to state.



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Old 07-30-2014, 02:22 AM
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Join Date: Jul 2014
Posts: 2
Hi, thanks for the thorough explanation.

Please note that this is not a foreign corporation, is a LLC incorporated in Wyoming.

* It's indeed a pass-through (disregarded entity) for IRS purposes.
* I got a EIN as well.
* No income, office, employees or anything in the US other than the fact it is incorporated in Wyoming.

Do you think I still need to file annually?



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Old 07-30-2014, 03:36 AM
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Join Date: Oct 2010
Posts: 5,139
Quote:
Originally Posted by valuenaut View Post
Hi, thanks for the thorough explanation.

Please note that this is not a foreign corporation, is a LLC incorporated in Wyoming.

* It's indeed a pass-through (disregarded entity) for IRS purposes.
* I got a EIN as well.
* No income, office, employees or anything in the US other than the fact it is incorporated in Wyoming.

Do you think I still need to file annually?
* It's indeed a pass-through (disregarded entity) for IRS purposes.
* I got a EIN as well.
* No income, office, employees or anything in the US other than the fact it is incorporated in Wyoming.
=======>>>>>>>>>>>>>>>Unless the LLC is electing to be treated as a partnership or as a S corporation, the SMLLC is not a pass thru As mentioned previously. theSMLLC is a “disregarded entity,” and the LLC’s activities should be reflected on its owner’s federal tax return. If the owner is an individual, the activities of the LLC will generally be reflected on Sch C/SE OF 1040: A non US resident can set up a SMLLC in WY; The term foreign just means that the primary location of the business is outside the state. For example, if you have an LLC in Ohio or in another state for example, and you are selling products in Wy, you must Register as a Foreign LLC in that state.So once you live in Wy state and set the LLC there, then as you said it is not a foreign LLC.
If you are not going to have a physical location in Wy state, then,your SMLLC is a foreign LLC.
Also For U.S. federal tax purposes, "foreign corporation" means a corporation which is not created or organized in the US.
Do you think I still need to file annually?=====>>>>>>>>>>>>As mentioned previously, it depends; As a SMLLC owner who is non-resident alien is taxable only in respect of business income that's "effectively connected" with the conduct of a U.S. business. For example, assume that you have some consulting income, then, only income earned from consulting services actually performed within U.S. borders is "effectively connected".

Be aware that merely executing a contract within the U.S., or with a U.S. business or individual as counter-party, does not generate effectively connected income: the consulting work must actually be performed within the U.S. (One caveat: if your LLC has a U.S. bank account which generates interest, or if it holds U.S. investments, or has other, similar, U.S. source income, that particular income will be subject to U.S. tax).

If your SMLLC has any effectively connected income, that income is both taxable by the U.S. and subject to the quarterly estimated payment requirement. You, as a non-resident alien, would file your quarterlies on an IRS Form 1040-ES (NR) and your annual return on a Form 1040 (NR).



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