Am I screwed? - IRS Problem

[Fajosst]

Hey, guys,
I am having some problems with my MMLLC (Multi-Member LLC - DE)

I formed the company in 2017 and have not paid any federal tax for the IRS since then. We are non-US and non-resident.

According to what I checked, I should have already sent some forms (8804, 8805, 1065 and K-1 of partners) however we did not do that.

We even thought about dealing with the penalties, however, it is a US Partnership Domestic, so we have to pay taxes on profits individually. We would lose a lot of $ on taxes. The idea of creating the LLC was just to avoid taxes, but that would only apply if it was a one-member LLC. Which is not the case.

We are considering dissolving the LLC in December. So far, we haven't received any letters about penalties, debts or anything from the IRS. We have no bank accounts in the U.S. (only Payoneer with the name of the Company with $61 and accounts with the name of the partners in Payoneer and foreign banks).

Any recommendations? We don't want to deal with taxes. We are checking the idea of dissolving the LLC and keeping the debts in the USA. I know that wouldn't solve all the problems, but I don't see solutions. What consequences can we face? Both partners are digital nomads. Are we screwed?

 

[John Andrews]

No fucks shall be given unless your country extradites to the US.

Seriously, just dissolve it. Perhaps you can open a UK LLP instead?

 

[Fajosst]

No fucks shall be given unless your country extradites to the US.

Seriously, just dissolve it. Perhaps you can open a UK LLP instead?

Sounds like a good option. I can open another LLC DE, but this time with only one member. The new LLC would not inherit the problems and debts of the previous LLC. In which case I'd really get tax benefits. I was too stupid to start the last company.

I am a digital nomad, I do not stay in any country long enough to be considered a resident. Could any country possibly deport me? I don't think so, the amounts are not substantial, my revenues are between 50-100K USD annually, I don't think it's worth it for the IRS to get involved in an international persecution.

 

[John Andrews]

Yeah, I don't think you'll end up in trouble over those amounts.

 

[fshore]

You shouldn't have to pay to any tax to the US if you didn't do business in the US, but you might get some penalties for not filing a tax return.

 

[Fajosst]

You shouldn't have to pay to any tax to the US if you didn't do business in the US, but you might get some penalties for not filing a tax return.

According to the accountant I checked, I have to pay. It is a Partnership. If it were a single member LLC you would be right. Members must pay 10% of the distributed profits. The Partnership itself does not have to pay anything. But the partners do.

And there are penalties as you mentioned. But I'm not willing to pay, I intend to dissolve MMLLC. I hope it doesn't have any serious consequences, I don't have any substantial income and I don't have $ in the US. Maybe only on Payoneer if this is considered.

 

[fshore]

Did you do business in the US? The partners shouldn't have to pay any tax if the partnership didn't do any business in the US (if you didn't have any effectively connected income).

 

[Fajosst]

Did you do business in the US? The partners shouldn't have to pay any tax if the partnership didn't do any business in the US (if you didn't have any effectively connected income).

I make sales to other countries. LLC Multi-Member for tax purposes is treated as a partnership, i.e. it is not taxed. But the profits of the Partnership must be distributed between the partners. The income of the partners, regardless of the country of origin, comes from the US Partnership, so it is considered ECI income and is taxed at 10%.

That is, the LLC is not taxed, but the profits of the partners must be declared on forms 8804, 8805, K-1, while the MMLLC must file form 1065 for the IRS. I checked this information with U.S. accountants.

I thought like you, but your reasoning is correct only considering a single-member LLC. If the LLC has +2 members, then it is considered a partnership for tax purposes. And partnerships are not disregarded. The single-member LLC is disregarded.

Anyway, I'm not going to pay these taxes and I missed the deadline to file the forms, I'll check another jurisdiction to start a new company with tax benefits, in this one I've really made a lot of mistakes.

 

[fshore]

Partnership is not disregarded but the income flows thought to you personally. If the partnership is not engaged in a US business then you are also not.

 

[Martin Everson]

Are we screwed?

Yes.

Could any country possibly deport me? I don't think so, the amounts are not substantial, my revenues are between 50-100K USD annually, I don't think it's worth it for the IRS to get involved in an international persecution.

The IRS is no joke period and yes they will use an extradition treaty if needed and have done . Failure to file is to all intents and purposes "intent to deceive" and will lead to criminal charges. If you owe them money then pay it. 50-100k annually is not chicken feed. The IRS have unlimited powers and the statute of limitations for tax fraud is unlimited for civil charges remember. You also face a year in prison for every year you fail to file the tax return. Ask yourself if you feel lucky against the might of the US governments extraterritorial reach.

Anyway, I'm not going to pay these taxes and I missed the deadline to file the forms.

Do not make the mistake of thinking the IRS will not find you. If they know who you are it may take them many years and with interest and penalties piling up but they will eventually find you once they begin a Taxpayer Delinquency Investigation and you get that letter start to cry. The IRS takes tax filing very very seriously so think wisely. You can't run forever from the Federal government of the united states....lol.

 

[Fajosst]

Partnership is not disregarded but the income flows thought to you personally. If the partnership is not engaged in a US business then you are also not.

The Partnership receives foreign funds, but legally, for tax purposes, I receive revenues from a US Partnership (which has distributed the money to the partners) so it would be equivalent to ECI/ETBUS.

The IRS is no joke period and yes they will use an extradition treaty if needed and have done . Failure to file is to all intents and purposes "intent to deceive" and will lead to criminal charges. If you owe them money then pay it. 50-100k annually is not chicken feed. The IRS have unlimited powers and the statute of limitations for tax fraud is unlimited for civil charges remember. You also face a year in prison for every year you fail to file the tax return. Ask yourself if you feel lucky against the might of the US governments extraterritorial reach.

Thank you for your honesty, your comment has me worried. My accountant stated that, with these figures for only 1/2 years, he believes it is very unlikely that the IRS will take steps to levy assets in other countries, but he said that a trip to the U.S. tourism might not be a good idea, for example...lol

 

[Martin Everson]

Thank you for your honesty, your comment has me worried. My accountant stated that, with these figures for only 1/2 years, he believes it is very unlikely that the IRS will take steps to levy assets in other countries

He is speaking the truth. Immediate action will not be taken but you will be on their databases for a Taxpayer Delinquency Investigation eventually and your name shared into other systems. What makes it worse is its not the tax you may owe i.e you may end up owing them nothing. It is however the fact you didn't file forms and subsequent penalties that will bring all the drama. Not filing is very serious in U.S....lol.

but he said that a trip to the U.S. tourism might not be a good idea, for example...lol

Immediate travel is not an issue...lol. But once they got you in their system its goodnight. The IRS is underfunded and inefficient and you could easily go 8-10 years with no issues. However as you are not a U.S Person that in fact makes it worse as there are no restrictions on how they gather information on foreign nationals or track you i.e access VISA, MasterCard movements (all US Companies btw) etc etc...lol.

P.S Don't worry...I mean whats the worst they can do?

 

[fshore]

Did you enter the two partners when you got the EIN? If not then probably irs is not even aware of you.

 

[Fajosst]

Immediate travel is not an issue...lol. But once they got you in their system its goodnight. The IRS is underfunded and inefficient and you could easily go 8-10 years with no issues. However as you are not a U.S Person that in fact makes it worse as there are no restrictions on how they gather information on foreign nationals or track you i.e access VISA, MasterCard movements (all US Companies btw) etc etc...lol.

P.S Don't worry...I mean whats the worst they can do?

You convinced me to look for a better solution. I have 8K USD held in a digital wallet (Ecopayz), I think I can release that $. I think that would be enough to solve my problems. Or help me a lot. I must pay 10% of the net profits of Partnership, I believe it is $2K per partner + penalties. That would help a lot. And I will try to close LLC as soon as possible so that my fiscal year 2019 is shorter.

Did you enter the two partners when you got the EIN? If not then probably irs is not even aware of you.

Yes, I did

 

[Martin Everson]

You convinced me to look for a better solution. I have 8K USD held in a digital wallet (Ecopayz), I think I can release that $. I think that would be enough to solve my problems. Or help me a lot. I must pay 10% of the net profits of Partnership, I believe it is $2K per partner + penalties. That would help a lot. And I will try to close LLC as soon as possible so that my fiscal year 2019 is shorter.

Wise decision to just pay whats owed and close that chapter for good. It would be a bad idea to be on the run from the IRS aka try and run from the U.S Federal Government.

On a different subject even the U.K's potential next prime minister (Boris Johnson) had run in with the IRS and took the wise decision to pay up as he could not escape them...lol. He however was a U.S citizen by birth...lol

https://www.forbes.com/sites/robert...n-paid-irs-is-now-renouncing-u-s-citizenship/
---- start quote

"The IRS would keep trying to collect, and the statute of limitations might never run. Indeed, there was more than idle talk that Mayor Johnson could face arrest on his next U.S. visit. So he paid his “absolutely outrageous” U.S. tax bill. It was really the only way he could have solved it."

---- end quote

 

[Andrew Gooden]

Wise decision to just pay whats owed and close that chapter for good. It would be a bad idea to be on the run from the IRS aka try and run from the U.S Federal Government.

On a different subject even the U.K's potential next prime minister (Boris Johnson) had run in with the IRS and took the wise decision to pay up as he could not escape them...lol. He however was a U.S citizen by birth...lol

https://www.forbes.com/sites/robert...n-paid-irs-is-now-renouncing-u-s-citizenship/
---- start quote

"The IRS would keep trying to collect, and the statute of limitations might never run. Indeed, there was more than idle talk that Mayor Johnson could face arrest on his next U.S. visit. So he paid his “absolutely outrageous” U.S. tax bill. It was really the only way he could have solved it."

---- end quote

As always you are the best source of information in this forum. Thank you again for the free underground university education

 

[Educate]

He is speaking the truth. Immediate action will not be taken but you will be on their databases for a Taxpayer Delinquency Investigation eventually and your name shared into other systems. What makes it worse is its not the tax you may owe i.e you may end up owing them nothing. It is however the fact you didn't file forms and subsequent penalties that will bring all the drama. Not filing is very serious in U.S....lol.



Immediate travel is not an issue...lol. But once they got you in their system its goodnight. The IRS is underfunded and inefficient and you could easily go 8-10 years with no issues. However as you are not a U.S Person that in fact makes it worse as there are no restrictions on how they gather information on foreign nationals or track you i.e access VISA, MasterCard movements (all US Companies btw) etc etc...lol.

P.S Don't worry...I mean whats the worst they can do?

Wait, wait, wait...if he is not a US person and that is not a US company...why would he file anything with IRS? Or am I missing something?

 

[OTR365]

Or am I missing something?

Yes. Multi-Member LLC - DE.
DE = Delaware.

 

[Educate]

Yes. Multi-Member LLC - DE.
DE = Delaware.

OHHHh right.

 

[European]

Hey, guys,
I am having some problems with my MMLLC (Multi-Member LLC - DE)

I formed the company in 2017 and have not paid any federal tax for the IRS since then. We are non-US and non-resident.

According to what I checked, I should have already sent some forms (8804, 8805, 1065 and K-1 of partners) however we did not do that.

We even thought about dealing with the penalties, however, it is a US Partnership Domestic, so we have to pay taxes on profits individually. We would lose a lot of $ on taxes. The idea of creating the LLC was just to avoid taxes, but that would only apply if it was a one-member LLC. Which is not the case.

We are considering dissolving the LLC in December. So far, we haven't received any letters about penalties, debts or anything from the IRS. We have no bank accounts in the U.S. (only Payoneer with the name of the Company with $61 and accounts with the name of the partners in Payoneer and foreign banks).

Any recommendations? We don't want to deal with taxes. We are checking the idea of dissolving the LLC and keeping the debts in the USA. I know that wouldn't solve all the problems, but I don't see solutions. What consequences can we face? Both partners are digital nomads. Are we screwed?

Filing yes, but tax I do not think you have to pay any if all members are non-US residents and you are not ETBUS. No withholding either. This is from the IRS site:
https://www.irs.gov/publications/p519