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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29558
Experience:  Taxes, Immigration, Labor Relations
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We have a question regarding tax issue. We have registered a

Customer Question

Hello,We have a question regarding tax issue. We have registered a US company in Wyoming, I would like to know which taxes that we should file?The form of the company is a LLC, and all the partners are foreigners. Our company is a online retail store, we are selling mostly backpacks all over US., but we don't have a physical location and no payroll happened in US. , and we are using the third party warehouse in different states.In this case, what kind of taxes should we file for both company and all the partners?Thank you for taking your time assist us on this question, you time and help is greatly appreciated.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Regarding federal income tax liability...

In short - the LLC with several members is classified as partnership.

That is US partnership and it is required to file US tax return - form 1065.

Partnerships do not pay income taxes - instead - all taxable income is passed to partners who should file individual tax return.

The complication comes because there are nonresident alien partners.

Because of that - there are additional reporting requirements and withholding requirements.

So while the LLC doesn't pay income tax - it is required to withhold income from partners and remit to the IRS.

That withholding is credited toward income tax liability of each partner.

Customer: replied 1 year ago.
Hello Lev,Thank you for your answer.
So in my case, we have to file -form 1065 for the company? Is that all the taxes that we should file as a company? What about the state taxes, and sales taxes?Is it obligated to file an individual tax return for all partners?In addition, I don't get the point "So while the LLC doesn't pay income tax - it is required to withhold income from partners and remit to the IRS." . If the LLC doesn't pay income tax, why should withhold income from partners ?Thanks
Expert:  Lev replied 1 year ago.

So in my case, we have to file -form 1065 for the company?

Yes - that is correct. But there are additional forms and withholding from nonresident alien partners.

The fact of having an LLC with several members - makes your situation more complicated because use such LLC is NOT a disregarded entity - but it is classified as a partnership for US tax purposes.

There are special withholding requirements when the partnership have nonresident alien partners.

Here is IRS site regarding that

https://www.irs.gov/Individuals/International-Taxpayers/Partnership-Withholding

https://www.irs.gov/Individuals/International-Taxpayers/Who-Must-Withhold

Is that all the taxes that we should file as a company?

For federal tax purposes - yes.

What about the state taxes, and sales taxes?

Sales taxes are regulated on state and local level. There is no federa sales taxes.

Each state has different laws and regulations.

But generally - sales taxes are not paid by the seller - sales taxes are paid by customers.

The LLC may be only obligated to collect sales tax - if you have a nexus in any specific state - you are subject to sales tax regulations.

For instance - that is Wyoming LLC - correct? so if the LLC sells to Wyoming customers - it is required to collect sales tax and remit to taxing authorities.
Is it obligated to file an individual tax return for all partners?
Yes - every partner must obtain tax IS and file an individual tax return.

Taxes withheld by the partnership are credited toward that tax liability. All these calculations are done on the tax returns.
. If the LLC doesn't pay income tax, why should withhold income from partners ?

Partnership itself do not pay income tax - but each partner is responsible for his/her share of the partnership income.

For US partners - the partnership simply report taxable income to each partner and to the IRS.

requirements to withhold taxes from partners is ONLY for partners who are nonresident aliens.

The purpose of withholding - to cover possible tax liability.

Expert:  Lev replied 1 year ago.

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