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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4487
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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I own a travel related company incorporated in Uruguay which

Resolved Question:

I own a travel related company incorporated in Uruguay which receives 100% of revenues via Paypal. It would make our life easier to have a US bank account, for which I understand I am obliged to open a US inc or LLC. We do NOT render any service what-so-ever in the US. Can we open an LLC (not a branch of our company) simply for the benefit of being able to own a US bank account (despite not having any US operations)? Since our revenues will be 100% generated abroad, I would believe that we wouldnt be taxed in the US? I do understand that there are yearly costs of owning an LLC, but the income/revenue tax issue is what I'm concerned about.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

NPVAdvisor :

If you are not a resident, a US citizen, have a US location or have income derived from operations in the US you will not have to report any income

NPVAdvisor :

I can give you the IRS tax law citations (title 26 of the US code) regarding the entities that DO have to report, but there are no rules that say who DOES NOT, of course.

NPVAdvisor :

But again, US citizens have to pay income on tax or at least report and potentially get a credit for taxes paid to other taxing authorities o ALL worldwide income .... residents who have a presence her have to as well ... and even NON-resident aliens have to if it income is US source income Either effectively connected or earned from have a location and working in the US ... but it sounds as if you do not meet any of these tests

Customer:

But to open a US LLC that doesn't have any US operations, US income, or even costs (other than the yearly cost of having an LLC which is about $200 or so), but does have a bank account which receives money from foreign operations simply because it is easier to operate a paypal account with a US bank... is that legally ok?

NPVAdvisor :

From IRS: A nonresident alien individual engaged or considered to be engaged in a trade or business in the United States during the year DOES have to report, but this is the closest definition to you that exists, given your provided information .... See this: http://www.irs.gov/Individuals/International-Taxpayers/Taxation-of-Nonresident-Aliens

NPVAdvisor :

Yes, if the bank will open it for you (I'm assuming that your are creating the LLC so that you can have a tax ID for the bank account) ... WHat things will turn on (in terms of paying taxes) is whether IRS says having a US LLC is operating a business withing the US .. the bank probably WILL have to wothhold taxes on an interest paid to the account

Customer:

Do you mean withholding on the interests generated on whatever balance I have on my account, but not witholdings the actual capital, right? That seems fair. Money will be flowing in, and out. But all money received would be from the company's own paypal account.

Customer:

That's the last follow up. Excellent service

NPVAdvisor :

That's right, just any interest paid on the balance, not the balance itself

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 4487
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 5 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.

Thanks for the rating.

Let me know if I can help further

Lane

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Lane
Lane
JD, MBA, CFP, CRPS
3627 Satisfied Customers
Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986