{"id":588,"date":"2021-01-01T05:04:30","date_gmt":"2021-01-01T05:04:30","guid":{"rendered":"https:\/\/oandgaccounting.com\/staging\/?p=588"},"modified":"2023-02-24T07:25:05","modified_gmt":"2023-02-24T07:25:05","slug":"amazon-foreign-sellers-irs-taxes-and-1099-k-reporting","status":"publish","type":"post","link":"https:\/\/oandgaccounting.com\/staging\/amazon-foreign-sellers-irs-taxes-and-1099-k-reporting\/","title":{"rendered":"Amazon Foreign Sellers, U.S Taxation and 1099-K Reporting"},"content":{"rendered":"
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Foreign sellers who sell to U.S. customers on Amazon are often faced with the question of whether they have to pay taxes. When in doubt, they often take the safe route and report their profits. In fact, I\u2019ve reviewed several tax returns where a CPA, attorney, or other tax professional advised their foreign clients selling on Amazon to file for U.S. federal tax returns.<\/p>\n

However, in many cases, these foreign sellers were never required to file and are paying taxes without need. To help you avoid making the same mistake, here are the answers to the most important questions about Amazon foreign sellers and U.S. taxation.<\/p>\n

Are Foreign Sellers Selling Amazon.com Required to Pay U.S. Taxes?<\/strong><\/p>\n

Under Section 882<\/a>, a foreign corporation that is \u201cengaged in trade or business within the United States\u201d is subject to U.S. federal income tax on its income that is \u201ceffectively connected<\/strong> with the conduct of a trade or business within the United States<\/strong>. <\/p>\n

IRC \u00a7871(b)<\/a> also explains that a nonresident alien (NRA) individual is generally subject to U.S. income taxes at graduated rates on taxable income which is effectively connected (ECI<\/strong>) with the conduct of a U.S. trade or business (USTB)<\/strong>.<\/p>\n

What Qualifies as a \u201cU.S. Trade or Business\u201d (USTB)<\/a>? <\/strong>\t<\/p>\n

Think of USTB <\/a>as a \u201cshield\u201d to avoid US taxation. This is your first line of defense or the necessary condition that needs to occur before taxation results. For a foreign corporation or person to have effectively connected income, it must FIRST be engaged in a trade or business within the United States.<\/p>\n

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