I am non-US Resident and have a Delaware LLC. generating internet sales to US customers. Do I have to pay tax?

Question

I have a US bank account which is linked to PAYPAL. Both are in the name of my Delaware LLC. Do I hav to file income tax in the US? If so, how do I go about doing this as I dont live in the US.

Answer 1

Your question concerns the area of international tax law, which is one of the most complicated (but interesting) areas of law.

The answer to your question depends on many issues:

(1) Is your LLC a functioning organization, with its own bank account, records, etc., or is it a mere "alter ego" of yourself;

(2) If your LLC is a separate entity for tax purposes, did the LLC make an election to be taxed as a corporation, or is it a "pass through" organization, whose income is deemed to be _your_ income;

(3) Other than maintaining the website, do you (and/or the LLC) perform any "sales" activities in the U.S. (e.g. advertising, maintaining offices, etc)?

(4) Even more important questions are (a) where are you a citizen?, and (b) where are you a resident? The U.S. is a party to tax treaties with many countries, and the tax treaties clarify (usually) which country (the U.S. or 'other') will tax various types of income.

Without knowing the answers to these other questions, your question cannot be answered.

Either re-post the question with additional facts or, if your income is significant, consult a knowledgeable international tax attorney.

Good luck!

Answer 2

Why on God's Green Earth did you EVER set up a US LLC?? By doing so you effectively connected your income to the US and now you owe US taxes on that income! Had you stuck with some legal entity in your home country you would have had NO US tax liability at all. The fact that a majority of your income came from US sources would have been irrelevant (assuming that you did all the work outside of the US). You are liable for US taxes on the entire income of the US entity, including the foreign-sourced income. That's the price you pay for wanting to create a US entity. And you are a lot more traceable than you think. You had to provide certain basic identifying information when you formed the LLC. The IRS can levy your accounts receivable here in the US even though no US banking institution is involved. Many foreign banks have US branches and it can be attached that way or by levying directly from your US customers. The IRS would send a letter to each customer saying in essence: "Send all further amounts due to XYZ Corp to us until further notice." The issue of your country giving you credit for any US taxes paid is up to their laws. If they do then just claim the credit or deduction when you file your tax returns in your home country.

Answer 3

Ask the below 5 questions, if the answer is “yes” to any of them, you need to file a foreign qualification:
1. Will the LLC hire and maintain any W2 Employees?
2. Will the LLC be required to hold special licensing? (i.e. Mortgage, Real Estate, or Contractors License)
3. Will the LLC hold any real property? (i.e. rental property, personal property, or commercial property)
4. Will the LLC have a brick and mortar location? (i.e. office building or will a sign be hung somewhere and display the company name)
5. Will the LLC be shipping any product from within Delaware?

Answer 4

If the business is making a profit then yes, you would have to file a US return. I've attached an irs publication for non-resident aliens who might have to file a US tax return.

Answer 5

Probably. There's no good reason to do that, however. Dump the US based LLC. You can host a website anywhere and avoid US taxation completely.

Answer 6

YES you do have to pay income taxes as long as the business address is within the USA. There is a website below that should help you. Thank you for being honest and paying your taxes! =)
http://www.irs.gov