Foreign Owned Single Member LLC - US bank account and "ECI" relation

[diginomad]

I have a single member LLC in Delaware and I get income from AdSense and PlayStore, so It's only digital goods and I will never go to the US (I will always work outside the US).

I was able to open a "TransferWise" business account for the company and this is logically a "US" bank account registered under my company name.
The best advantages of having a "SMLLC" as a foreigner is that you don't need to pay US taxes unless you have what the IRS calls "Effectively Connected Income", so you don't need to file form 1140nr.

I'm quite user that all my income is NOT ECI as I live outside the US and I get only income for digital stuff (AdSense revenue and PlayStore in app purchases), but this is not the point.
The point is that I talked to a few accountants (CPA), and although they agree that my income is theoretically NON ECI, the only fact that I have a "US business account" make this income "ECI" and therefore taxable (and I would need to file 1140nr).

What do you think?

If this is true, having a SMLLC as foreigner would no longer be an attractive setup.

Based on this IRS page Effectively Connected Income (ECI) | Internal Revenue Service It seems they don't mention anything about the account location.

I wonder why a lot of reputable CPA interpret this in that way? Are they simply no up-to-date or not familiar with foreign owned SMLLC?

 

[sujoe]

using a US company to collect payment from AdSense and Playstore does not make you USTB. You are not even selling services to Google, even if you are it doesn't matter. You are talking to the wrong accountant, i'm sure they are US-centric accountant. try to talk to some international taxation accountants with US taxation expertise

 

[Fulton Abraham Sanchez]

I have a single member LLC in Delaware and I get income from AdSense and PlayStore, so It's only digital goods and I will never go to the US (I will always work outside the US).

I was able to open a "TransferWise" business account for the company and this is logically a "US" bank account registered under my company name.
The best advantages of having a "SMLLC" as a foreigner is that you don't need to pay US taxes unless you have what the IRS calls "Effectively Connected Income", so you don't need to file form 1140nr.

I'm quite user that all my income is NOT ECI as I live outside the US and I get only income for digital stuff (AdSense revenue and PlayStore in app purchases), but this is not the point.
The point is that I talked to a few accountants (CPA), and although they agree that my income is theoretically NON ECI, the only fact that I have a "US business account" make this income "ECI" and therefore taxable (and I would need to file 1140nr).

What do you think?

If this is true, having a SMLLC as foreigner would no longer be an attractive setup.

Based on this IRS page Effectively Connected Income (ECI) | Internal Revenue Service It seems they don't mention anything about the account location.

I wonder why a lot of reputable CPA interpret this in that way? Are they simply no up-to-date or not familiar with foreign owned SMLLC?

If the source of your income is not USA and you are a foreigner (not US citizen) and you own a US SMLLC, your income is not ECI. If your SMLLC does any transaction with you such as a loan or distributions you will need to file form 5472.

 

[Piano]

Why don’t you contact the IRS directly for this ?