How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Lev Your Own Question

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22750
Experience:  Taxes, Immigration, Labor Relations
870116
Type Your Tax Question Here...
Lev is online now
A new question is answered every 9 seconds

Hello, I own solely a LLC, registered in Delaware, with

Resolved Question:

Hello,

I own solely a LLC, registered in Delaware, with a EIN.
When the LLC was opened, in 2005, i had to have a bank account, and as I was in New York by that time, my bank account is in NY. I'm a non US resident alien.
I've started my activity ( online business ) under the name of this LLC on 2009. The server for our websites are located in Texas, and some of them in France.
I have a PO BOX address, as well as a phone number in California, both related to this LLC.

>> I would like to know :

a. To which state i have to file LLC Annual return to ?

b. Which state should i file the State Sale Tax with ?

c. What forms should i use to do so ?

d. When should I file LLC Annual return, and pay my LLC's due to the IRS ?

f. What would be the more efficient solution for this case > DE registered company, selling online to all states in US and worldwide. Is it to have company address in DE, and a secondary address in CA, so business operated from DE, and tax paid to DE state ?

Thank you
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

a. To which state i have to file LLC Annual return to ?
so far - you need to file for Delaware where your LLC is registered.

if you are under jurisdiction of any other states - depends on if you have a nexus (physical presence) in any state. For instance - is you own the server located in Texas - you are under the Texas jurisdiction.

b. Which state should i file the State Sale Tax with ?
that depends on two factors - (1)you have a nexus (physical presence) in the state and (2) you provided taxable service or selling a taxable goods in that state.

from your explanation it is not clear where your business physically located and what goods or services are you selling.

c. What forms should i use to do so ?
we need to clarify previous issues before looking for a specific forms.

For Delaware - if you did not file for 2005-2009 - you most likely need to start again.


d. When should I file LLC Annual return, and pay my LLC's due to the IRS ?

Under default rules - the single member LLC is not taxable entity - all income and tax liability aroused from the LLC activities - are passed through to member and are reported on individual income tax return - depending on type of income - self-employment income, rental income, investment income, etc.

 

Please elaborate.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22750
Experience: Taxes, Immigration, Labor Relations
Lev and 5 other Tax Specialists are ready to help you
Customer: replied 5 years ago.

Thank your for your quick response LEV,

a. To which state i have to file LLC Annual return to ?
>> Company is solely owned LLC, I am non resident alien. Residence in France.
My LLC is registered in DE, and I stated its address once registered in France.

The type of business is Online business selling goods and services (cell phones, electronics), to USA, Worldwide throught website.
Server of the website is in Texas.
A phone number attached to the company is a CA based phone number (with vonage).
A physical address for the LLC is in CA.
The LLC bank account now is in NY.

That's between DE / CA / TX / NY .
>> Where is the nexus (physical presence) considered at, and to consider your question about "where your business physically located" . Therefor which state i have to file LLC Annual return to ?

b. Which state should i file the State Sale Tax with ?
(1)you have a nexus (physical presence) in the state and :
>> I have one address related to this business in CA, used to forward mails and parcels.
(2) you provided taxable service or selling a taxable goods in that state.
>> We sell mobile phones and electronics, shipped mostly from China (and also sometimes from USA), directly to our US & worldwide customers. As we have an address in CA, stated in the website, we do charge 8.25 % CA state TAX to our CA customers, in order to transfer these fees to CA.

c. What forms should i use to do so ?
>> "For Delaware - if you did not file for 2005-2009 - you most likely need to start again."
The company was registered on Aug 2005, but i did not do business with since late 2008 / early 2009.
I was just paying the DE franchise TAX + Registered Agent since 2005. LLC is now in "Good standing". What means of start again, and what should I do now that I began using this LLC for business on early 2009.

d. When should I file LLC Annual return, and pay my LLC's due to the IRS ?
>> The LLC is under Default rules (as I did not fill up any form to specify a specific rule for it).
But since I am a non US resident Alien, and when I've registered my LLC on 2005, I stated its address in France (my residence country). Do I still have to pay for self-employment income, or any other type of income, as an individual (I do not have residence in USA but abroad, I have a valid B1/B2 visa, valid till 2017), or can I just pay a TAX according to the profit made by my LLC for the business (Revenues minus expenses).

e. If I can ask pls a clarification for this case about :

Federal TAX : When, which form(s), what to pay, and to whom i have to pay Taxes to ?
State TAX : When, which form(s), what to pay, and to whom i have to pay Taxes to ?

Thank you,

Expert:  Lev replied 5 years ago.

 

from your explanation - it is still unclear about your business physical presence...

-- does your business own the Texas server or you are using hosting services?

-- as you are selling goods and services (cell phones, electronics) - where these goods are located (from where they are shipped) and where services are produced?

-- where are your physical location? in the US or outside the US?

-- do you have any warehouses, employees, etc in the US? if - yes - in which states?

 

Delaware will not tax LLC income as long as LLC do not do any business in Delaware.

as the LLC is now in "Good standing" - originally you did not indicated that - you may continue to use it.

 

If you are on the B2 visa in the US - you are not allowed to do any work. That includes working for the LLC - and might be considered a violation of your visa terms.

 

Please elaborate.

 

Customer: replied 5 years ago.

I was expecting a trext message , but finally checked the website and found out your reply. Thank you LEV.

 

-- it is still unclear about your business physical presence...

--> A address (PO Box) is related to the business. it serves for receiving bak statements, and forwarding parcels sometimes.

 

-- does your business own the Texas server or you are using hosting services?

--> we are using godaddy which claims its servers as Texas based

 

-- as you are selling goods and services (cell phones, electronics) - where these goods are located (from where they are shipped) and where services are produced?

--> Goods are located in China, and shipped from China. Services are produced in india.

 

-- where are your physical location? in the US or outside the US?

--> My personal physical location is in France, or in china or elsewhere. Some business trips within US, but it's not my country of residence.

 

-- do you have any warehouses, employees, etc in the US? if - yes - in which states?

--> No employees in the US, no warehouse except a PO BOX in CA.

 

--Delaware will not tax LLC income as long as LLC do not do any business in Delaware.

as the LLC is now in "Good standing" - originally you did not indicated that - you may continue to use it.

--> we have now a registered agent address. is this considered as a nexus in DE ?

And we've had till now maybe one or twi customers from DE, we have shipped them from China.

 

--If you are on the B2 visa in the US - you are not allowed to do any work. That includes working for the LLC - and might be considered a violation of your visa terms.

--> I am not working for the LLC as the job is done abroad in china and india.


Am I liable to Sales TAX in DE, or/and in CA ?
Am I liable to Fed Inc TAX ?

Thank you LEV

 

Expert:  Lev replied 5 years ago.

Based on your information - all LLC operations are abroad and there is no any activity in the US.

Having a mailing address or a registration in the US doesn't constitute business activities and doesn't constitute a nexus in the US.

Because Delaware doesn't tax the LLC that registered in the state but

 

Delaware has no sales tax and has no intangible personal property tax.

Delaware doesn't apply income tax and doesn't require a business license if the LLC does not do business in Delaware.

If your LLC sells anything to Delaware customers - that would be a different situations and LLC would be required to collect sales tax from such sales.

I do not see that your LLC has a nexus in any state and does not requited to register and doesn't required to collect sales tax.

However on the federal level - that is an US business entity. Generally - single member LLC is not a taxable entity and doesn't file a federal income tax return - all income and expenses are reported on member's individual tax return - and in most situations - considered self-employment income.

Generally - you would be required to file US tax return as a non-resident and report your self-employment income.

However - and there is always however... because you are a resident of France..

US has a tax treaty agreement with France - according to which:

Income that residents of France receive for performing personal services as independent contractors or self-employed individuals (independent personal services) in the United States is exempt from U.S. income tax if they do not have a fixed base regularly available to them in the United States for performing the services. If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base.

see for reference IRS publication 901 - http://www.irs.gov/pub/irs-pdf/p901.pdf

Let me know if you need any help.

 

Customer: replied 5 years ago.
Hi LEV, Thank you .

Based on your information - all LLC operations are abroad and there is no any activity in the US.

--> But around 70% of our customer are based in US (we ship to US Shipping addresses). Though the job is done from abroad, but we deliver to US customers ?

How this would be considered, as yes/no activity in the US.

 

Having a mailing address or a registration in the US doesn't constitute business activities and doesn't constitute a nexus in the US.

 

Because Delaware doesn't tax the LLC that registered in the state but

Delaware has no sales tax and has no intangible personal property tax.

Delaware doesn't apply income tax and doesn't require a business license if the LLC does not do business in Delaware.

If your LLC sells anything to Delaware customers - that would be a different situations and LLC would be required to collect sales tax from such sales.

--> Let's say if among 600 customers, 3 of them were in Delaware with DE shipping address. According to the fact that DE charges a fee on gros revenue (and not a sale tax as any other state CA, NY..) . Do you think i have to pay a percentage to DE, over gross revenue for 600 sales, or only the 3 shipped to DE ?

I do not see that your LLC has a nexus in any state and does not requited to register and doesn't required to collect sales tax.


However on the federal level - that is an US business entity. Generally - single member LLC is not a taxable entity and doesn't file a federal income tax return - all income and expenses are reported on member's individual tax return - and in most situations - considered self-employment income.

Generally - you would be required to file US tax return as a non-resident and report your self-employment income.

--> So i would not have to file anything ?

However - and there is always however... because you are a resident of France..

US has a tax treaty agreement with France :

--> Is this valid for French citizens, or for france resident. or both. As i'm not a french citizen, but i'm a france resident.

Expert:  Lev replied 5 years ago.

--> But around 70% of our customer are based in US (we ship to US Shipping addresses). Though the job is done from abroad, but we deliver to US customers ?

If you do business on the customer site or physically deliver goods and /or services to the customer site - that will be your business in this state.

If you are using third party delivery service and physically do not perform any job in the state - there is no nexus.

--> Let's say if among 600 customers, 3 of them were in Delaware with DE shipping address. According to the fact that DE charges a fee on gross revenue (and not a sale tax as any other state CA, NY..) . Do you think i have to pay a percentage to DE, over gross revenue for 600 sales, or only the 3 shipped to DE ?

Delaware has no sales tax...but does have income.

There are a complicated rules to allocate your business activities as performed in Delaware and outside the Delaware - and there will be income tax liability to the state.

Advantage of using Delaware LLC or corporation if all business activities are outside the US - not to have any activity in the state.

If Delaware LLC sells to Delaware customers - that will constitute a nexus.

--> So i would not have to file anything ?

As this is US LLC with several partners - it should file federal partnership tax return.

For single member LLC - filing requirements are based on filing requirements of the owner.

--> Is this valid for French citizens, or for France resident. or both. As I'm not a French citizen, but I'm a France resident.

Please see the reference above - Income that residents of France - that means - residents for tax purposes - so your income is taxable in France and not taxable in US.

If for any reason - your income is not taxable in France - you are not a France resident for tax purposes and the tax treaty doesn't apply.

Customer: replied 5 years ago.
-> Let's say if among 600 customers, 3 of them were in Delaware with DE shipping address. According to the fact that DE charges a fee on gross revenue (and not a sale tax as any other state CA, NY..) . Do you think i have to pay a percentage to DE, over gross revenue for 600 sales, or only the 3 shipped to DE ?

Delaware has no sales tax...but does have income.

There are a complicated rules to allocate your business activities as performed in Delaware and outside the Delaware - and there will be income tax liability to the state.

Advantage of using Delaware LLC or corporation if all business activities are outside the US - not to have any activity in the state.

If Delaware LLC sells to Delaware customers - that will constitute a nexus.

--> Would I be out of this situation in case i refund to all DE customers their payments, and cancel their orders (only 3 or 4 customers). And in the future to avoid this situation, never to ship to DE customers .

--> Is this valid for French citizens, or for France resident. or both. As I'm not a French citizen, but I'm a France resident.

Please see the reference above - Income that residents of France - that means - residents for tax purposes - so your income is taxable in France and not taxable in US.

If for any reason - your income is not taxable in France - you are not a France resident for tax purposes and the tax treaty doesn't apply.

--> Do I have to provide a proof for taxes in France ?

Thx LEV

Expert:  Lev replied 5 years ago.

--> Would I be out of this situation in case i refund to all DE customers their payments, and cancel their orders (only 3 or 4 customers). And in the future to avoid this situation, never to ship to DE customers .

Yes - that would be the best approach in your situation - to avoid any DE customers.

--> Do I have to provide a proof for taxes in France ?

You might need to provide certification to US payer that you are a resident of France in order to avoid mandatory withholding

You do not need to proof for taxes paid in France unless the LLC or you will be audited by the IRS. But you need to have it for your record.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.