If you are not a citizen of the US and do not pay US taxes with the IRS you need to evaluate the information reviewed by our tax accountant, as to why, as a foreigner or International Citizen, you should opt for a Corporation rather than an LLC.

From the desk of R. Steven Sandifer, President of Sandifer Accounting Services, Inc.

There are several websites out there telling foreigners that they don't have to pay taxes on LLC's. From an IRS standpoint this is a scam.

Q. Does an LLC with international members have to file a tax return with the IRS?

A. Yes. All corporations and Limited Liability Companies must file a tax return with the IRS on a Federal level. If you do not have a principal office in the state of Delaware you do not have to file an income tax but you still must file a franchise tax.

Since the foreign owner does not file a personal tax return, the foreign owner of a Delaware LLC "HAS" to register the LLC as a corporation (for tax purposes) with the IRS since there's no way to "pass-through" income or losses to their personal U S tax returns since you do not file any income tax returns.

You stand a chance of being prosecuted and having your bank accounts seized.

Q. Can an LLC owned by foreign members file a partnership return?

A. The answer is "No" since there is NO advantage for you to do so, unless of course you file a US personal tax return. If for some reason the foreign client files a US personal tax return then the scenario is different.

In addition, each member  would have to disclose and report everything about the partners, providing and including passport/visa info, name, address, country of residence, etc.

It really makes no sense for the foreign member(s) to file a partnership tax return, while they could seep benefits from filing as a "C" Corporation.

Any payments to you from the partnership requires a 35% backup withholding paid to the IRS. Unfortunately, the foreign member will not get that money back since the member doesn't file a personal tax return. There is no way for a "refund".

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