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Please see question at: http://www.asktaxguru.com/21969-93-commissions-shares-sent-to-overseas.html

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Old 11-15-2016, 08:19 PM
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Join Date: Nov 2016
Posts: 2
93% Commissions/shares sent to overseas

Hello
I?ll make it quick. Here is what?s going on:
I sell women?s accessories online and am located in Texas. My supplier lives in Turkey. He also sells his stuff- as retail on Etsy.com -besides wholesaling to me. 6 Months ago Paypal stopped doing business in Turkey. Etsy offers only Paypal outside US as a payment method. So,

I opened a Paypal account for him to use here in US. It is under my LLC?s name but he uses it. I collect 7% of the sales. I don?t do anything at all other than keeping 7% of the sales and sell them 93% a few times a month. He does the shipping, customer returns, customer complaints, etc,..The sales are around 100K a year. This 100K sales are paid to US based Paypal, then to my business acct then 93% of the money goes to Turkey via Western Union. Each time I send him the 93% he sends me an invoice. So at the end I will deduct 93% from my income and am planning to pay income tax out of 7%. My question is:

Is this ok? Will I be in trouble? He has no business registration or any establishment in the US. The invoices are just PDFs saying 93% partnership share. That?s all and that concerns me. I can show the money going out to Turkey Thru WestenUnion if needed

Since the money hits from paypal to my LLC?c business acoount, in case IRS comes after me, can I just simply dissolve the LLC and be safe?

Thank you in advance



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  #2 (permalink)  
Old 11-16-2016, 06:34 AM
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Join Date: Oct 2010
Posts: 5,233
I opened a Paypal account for him to use here in US. It is under my LLC?s name but he uses it. I collect 7% of the sales. I don?t do anything at all other than keeping 7% of the sales and sell them 93% a few times a month. He does the shipping, customer returns, customer complaints, etc,..The sales are around 100K a year. This 100K sales are paid to US based Paypal, then to my business acct then 93% of the money goes to Turkey via Western Union. Each time I send him the 93% he sends me an invoice. So at the end I will deduct 93% from my income and am planning to pay income tax out of 7%. My question is:

Is this ok? ====>It depends; aslongas you prove 93% of the income generated IN US does not belong to you, then yes; in this case you do not need to pay taxes on the 93% of the income generated in US. And aslongas the LLC is selling tangible goods in the US, then he is required to report the income from this business to the IRS. Non-US residents report their US sourced income on form 1040NR.

Will I be in trouble? ====>as mentioned above; UNLESS you pay taxes on the income, he needs to pay taxes to IRS

He has no business registration or any establishment in the US. The invoices are just PDFs saying 93% partnership share. That?s all and that concerns me. I can show the money going out to Turkey Thru WestenUnion if neededSince the money hits from paypal to my LLC?c business acoount, in case IRS comes after me, can I just simply dissolve the LLC and be safe? ===>>>>>>>as said previously, to prove that you do not need to report the income onyour return as it si his income not yours you may send a copy of wire transfer to IRS on your return. Then you?d be OK and no need to dissolve your LLC whether or not the LLC is a SMLLC or MMLLC



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