Tax Considerations

Tax Benefits

What are the tax benefits of an LLC?

The LLC is exempt from paying US taxes (before the IRS) as long as all of the following characteristics are met:

Member of the LLC does not reside in the U.S.
Member of the LLC is not a US person
LLC has no physical presence in the U.S.
LLC has no employees in the U.S.

When do I lose the tax benefit of an LLC?

When one or more of the aforementioned characteristics are not met.

Tax Obligations

On what basis do you file your income tax return with the IRS?

On the income and expenses incurred by the LLC in the tax year prior to the year of filing the income tax return (example the 2025 income tax return is due in 2026).

What happens if I do not file a Tax Return with the IRS?

They can fine your LLC up to $25,000.00 dollars when it is a single member. If it is a multi member, they can impose monthly fines depending on the failure. If you get in trouble with the IRS, you can get in trouble on a trip to the U.S. if you do not live in the country.

What is the penalty for late filing of a Tax Return with the IRS?

It depends on the IRS as it takes into account multiple factors, including the number of members the LLC has, the time you have taken to file your income tax return, etc. The amount of the penalty is known a few weeks after the late filing of the income tax return with the IRS.

How do I find out how much is the penalty that the IRS put on my LLC if I file my Tax Return late?

The IRS issues a letter with this information and the deadline for payment. This letter is sent to the address that the LLC registered with the IRS when it applied for the EIN. The IRS sends the letter by regular mail and it is the obligation of the LLC owner to be aware and pay it within the deadline to avoid the accumulation of penalties.

Can I appeal a penalty levied by the IRS against my LLC?

It can be appealed, however, the decision to abate or waive it is 100% up to the IRS.

Do I have to pay for the service of appealing a penalty imposed on my LLC by the IRS?

If you want us to do the appeal on behalf of your LLC, the cost of our service is $200.00 non-refundable.

What is the difference between Franchise Fee (FF) and Income Tax Return?

FF is a tax charged annually by some states to the LLC.

Income Tax Return is what every LLC must file annually with the IRS.

Can I dissolve my company before filing my IRS Income Tax Return so I don't have to file it?

No, from the moment of formation of an LLC there is already an obligation to file an Income Tax Return with the IRS.

To dissolve an LLC a final LLC Income Tax Return must be filed.

What if my LLC generates thousands of dollars in income at the end of the year, does it have to pay US taxes?

Before the IRS, the LLC is tax exempt as long as it meets all of these characteristics:

LLC has no physical presence in the U.S.
LLC has no employees in the U.S.
Member(s) of LLC not residing in the U.S.
Member(s) of LLC is not a US person

If I sell on AMAZON do I have to pay taxes?

If you are a US person or resident of the US, yes. If you do not reside in the US and have no employees or physical presence, you have tax benefits.

Communication with the IRS

I received a letter from the IRS with the identifier code CP 282, what should I do?

That letter informs you that your LLC may have to file additional form(s) to supplement the Income Tax Return you already filed with the IRS. If your LLC received income from U.S. sources, the income is classified as Effectively Connected Income (ECI) which means it is from a U.S. source, if so, you must file additional form(s) with the IRS.

If your LLC's income is not classified as ECI (not from a U.S. source) you do not need to do anything.

You are the one who knows whether or not the LLC's income is from a U.S. source.

I received a letter from the IRS with the identifier code LTR 168, what should I do?

Keep it for your records. This is the formal letter issued by the IRS certifying that your LLC's late filing penalty has been waived.

International Tax Considerations

If my LLC ends the tax year with economic benefits, would I have to declare those benefits in my country?

You should seek advice from an accountant or tax expert in your country as we do not offer tax or accounting advisory services.

Should I hire an accountant or tax advisor in my country of residence because you do not provide such services?

Yes, you should seek advice from an accountant or tax advisor in your country as we do not offer these services.

If I have a US social security number because I got it when I studied in the US, does that affect the tax benefit I have as a non-resident alien in the US?

If you meet the above requirements, your LLC would have the tax benefit.

Will the United States share my information with the government of my country of tax residence?

The U.S. government does not automatically share information with foreign governments. When it does, it does so because it is required to do so by an order of a competent authority in the United States, such as a U.S. Attorney's Office or a court that is conducting a case or judicial investigation of a specific person or entity.

Must an LLC include VAT in its invoices?

No, the LLC bills net.