Beware Australian Amazon Sellers using LLC’s
Australian Amazon sellers using LLC’s to conduct their Amazon business in the USA should be aware of new changes to the reporting requirements for LLC’s owned by foreign entities (individuals & corporations). See article from Ernst Young
Foreign owned LLC’s (LLC’s with 25% or more foreign ownership) are now required to complete Form 5472 and lodge with IRS.
Beware the penalties are severe.
The penalties for not lodging a complete Form 5472 by the deadline date are US$10,000 for the first 90 days and a further US$10,000 for each 30 days thereafter. Deadline dates in the USA are fixed, not like to soft deadlines that we have in Australia.
An incomplete Form 5472 is deemed as unlodged, so if you get it wrong it could be an expensive mistake.
LLC’s are not necessary for Australian based Amazon Sellers and are in many cases the wrong structure that will result in both paying more tax and an administrative nightmare.
An Australian Pty Ltd company will achieve the same result in terms of corporate protection and in most cases, result in paying less tax even after the costs of owning and maintaining the company structure.
Prediction: The reporting requirements and use of LLC’s by foreign entities is going to get much worse. The current investigations into Russian interference into the 2016 USA Election are uncovering significant foreign money laundering through LLC’s. Expect the rules to get tightened significantly.
If you are currently trading through an LLC, we can change your structure relatively easily to a structure where you don’t have to worry about international tax and lodging tax returns in multiple jurisdictions.