USA Tax implications for foreign corporation selling on Amazon.com

[bob76]

I am trying to determine US tax liability based on USTB/PE for selling via Amazon Fulfillment by Amazon (FBA) with a foreign corporation or foreign-owned US LLC pass-thru entity.

With Amazon's FBA program, the foreign corporation (FC) can sell on the Amazon.com platform in the US. The inventory is stored in Amazon's warehouses in the US and the FC owns the inventory up until Amazon facilitates the sale between the FC and US customer.

The FC has no physical presence in the US. It just sends its inventory from China to Amazon's warehouses and then sells it via their platform.

Based on this do you think I am or am not a US Trade or Business (USTB)?

If I am a USTB then I have to look to PE and country specific tax treaties which I think in general would exempt me from tax but I would still have to file.

If I can say I am not a USTB then I don't have to file at all.

Also I am hoping that if I say I am not USTB then I could also create a US LLC pass-through entity owned my the FC that could accept payments from Amazon.com and pay for various SAAS tools with a USD credit card in the LLC's name.

Any thoughts?

 

[kirby]

Are you an American citizen? That makes a difference.

 

[bob76]

How would this be relevant? I am talking about a foreign corporation or a US LLC owned by the foreign corporation.
I am American, but I live overseas. In this scenario, I would be the manager of the US LLC that is owned by my foreign corporation.

 

[kirby]

Whoa! Looks like I touched the "of course this business is tax-free" nerve. So OK, I'm outta here...

One last thing though, check out IRS form 5471. It is for American citizens to report their ownership of a foreign corporation. It is HUGELY complex and its a $10K fine for failing to file the form or filling it out with incorrect info. Good luck!

 

[bob76]

Hi Kirby,

I did not mean to come off this way and I apologize if I did.

I am very aware of 5471 and it costs me a lot of money to file correctly

I understand in the above scenario I would have to file 5471. Looking back at my first post I realize I was not so clear. What I meant to say is what is the tax liability in the US for the FC or the US LLC owned by the FC.

I really appreciate you taking the time to look at this would love to hear any more thoughts you had on it.