Can multiple states demand income tax from an LLC? We are a Utah LLC providing SAAS (software as service) on cloud available to all US market. Wisconsin Dept of Rev. has assessed our LLC for partnership income tax, because they claim our company has nexus for income tax based on fact that our company provides service that is used by or benefits a Wisconsin-based company and (that is considered "doing business in their state".) Tax 2.82(4)(b) Regularly performing services outside Wisconsin for which the benefits are received in Wisconsin. Regularly engaging in transactions with customers in Wisconsin that involve intangible property and result in receipts flowing to the corporation from within Wisconsin. In our defense, we responded that we are not doing business in their state (WI) but rather conducting business on the cloud (in UT) and Wisconsin customers are purchasing from us here in Utah. Our appeal was denied simply because of: Tax 2.82(4)(b)2. 2. Regularly selling products or services of any kind or nature to customers in Wisconsin that receive the product or service in Wisconsin. (Just because we are on the cloud does that mean we are subject to income tax in every state that our customers use our services? That seems absurd but I am not a tax attorney). Has anyone in this forum encountered such a far reaching statute? Do you have any suggestions as to what to state in our appeal to the WI Commission?
I wouldn't be surprised to see other states and jurisdictions with similar statutes. Fortunately, in the United States, there is a safe harbor against demands for state income taxes: For every dollar of taxable income, you can only be taxed by one state. (This was affirmed by the Supreme Court in 2015 in Comptroller of the Treasury of Maryland v. Wynne.) Therefore, if you show that the LLC (or its members if it's a pass-through) paid taxes to another state on the income in question (e.g., by sending a copy of the tax return), that's legally the end of the matter.
The "point" of including bank-interest income on your tax return rather than having the government automatically deduct what it feels that you would owe is that the government is not legally empowered to take money away from you in that fashion. The government is legal empowered to compel you to pay your taxes, and there are numerous rules enacted as law or as a consequence of laws passed. You can read the various relevant laws here. There simply is no general law that says that banks must withhold taxes on interest. There might be a specific case when an entity is subject to backup withholding (as a response to a taxpayer not following certain rules). There are also special rules regarding non-resident alien withholding, which could require interest withholding. Apart from the intrinsic political unpopularity of imposing new withholding requirements on people, it is difficult to compute the correct amount to withhold, since not all interest is taxable. In theory, a set of rules could be constructed to require withholding of interest income, if Congress were to pass a law similar to 26 USC 3402.
The key difference is that Best Buy is a corporation, and you are probably thinking of a painter who does not do business as a corporation. (They might be a sole proprietor, for instance.) As far as I know, the $600 rule isn't about Form W-9 itself. Rather, the rule is that when your business pays more than $600 for services, you may be required to file Form 1099-MISC. One of the boxes on that form asks for the recipient's Taxpayer Identification Number (TIN), so you have to get that from them somehow, and a common way (though not the only way) is to give them a Form W-9 and ask them to fill it out and return it to you. Form W-9 also asks the recipient to state whether they are subject to backup withholding; if they are, or if they won't give you their TIN, then you have to withhold taxes from the payment and send it to the IRS, reporting this on the 1099-MISC as well. Now, if you look at the section &quot;Exceptions&quot; on the 1099-MISC instructions: Payments for which a Form 1099-MISC is not required include all of the following. Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation). However, see Reportable payments to corporations, later. Best Buy is a corporation, and none of the exceptions under &quot;Reportable payments to corporations&quot; apply when you are paying them for computer repair services. Therefore, you do not have to file a 1099-MISC when you make such payments to Best Buy. As such, you have no need to get their TIN, and therefore no need to ask them to fill out a W-9.
Do I have to pay taxes if I register the domain but the website income belongs to someone else? No. The person or company who runs, and/or profits from, the business is the entity under obligation to pay all the applicable taxes: Value Added Tax, income tax, corporate tax, and so forth. Unless you charge a significant amount therefor (see the comments), the mere registration of just one domain is unlikely to trigger tax obligations.
That really sucks. I've had similar experiences when handling the probate proceedings of lawyers who were not good about returning original wills to clients. I am providing an answer under general principles without researching Oregon specific accounting, record retention and probate laws, to at least give you a start although I recognize that a better answer would research these questions. The accounts/clients from her business were sold to another woman. Is it legal for us to transfer everything to her possession? Probably yes. There should be a government agency in Oregon that regulates accountants that has rules regarding that question. The linked rule seems to govern this situation. It says in Rule 801-030-0015(d) that: (d) Custody and disposition of working papers. (A) A licensee may not sell, transfer or bequeath working papers described in this rule to anyone other than one or more surviving partners or stockholders, or new partners or stockholders of the licensee, or any combined or merged organization or successor in interest to the licensee, without the prior written consent of the client or the client’s personal representative or assignee. (B) A licensee is not prohibited from making a temporary transfer of working papers or other material necessary to the conduct of peer reviews or for the disclosure of information as provided by section (1)(b) of this rule. (C) A licensee shall implement reasonable procedures for the safe custody of working papers and shall retain working papers for a period sufficient to meet the needs of the licensee’s practice and to satisfy applicable professional standards and pertinent legal requirements for record retention. (D) A licensee shall retain working papers during the pendency of any Board investigation, disciplinary action, or other legal action involving the licensee. Licensees shall not dispose of such working papers until notified in writing by the Board of the closure of the investigation or until final disposition of the legal action or proceeding if no Board investigation is pending. So, a transfer to a successor firm appears to be permitted. What if she refuses to take the documents? Her probate estate could retain them and stay open, they could be returned to clients, or there could be a rule established by the Oregon body that regulates accountants that authorizes a central depository of such records. In Colorado, for example, in the case of law practices with no successors, original wills and estate planning documents can be deposited in the records of the court with probate jurisdiction that has jurisdiction over the territory where the decedent's practice was located. But, I could not locate any provision of this kind in Oregon law. Is it legal for us to destroy/shred/etc. the documents? In many cases, yes. Some states, by statute or regulation, and others by custom, allow business records to be destroyed as a matter of course, normally one year after the longest statute of limitations that could apply to a dispute where the records would be relevant (often seven years since the longest normally applicable tax statute of limitations is six years). Destroying tax returns is usually not a big concern because a transcript of the old tax returns can be ordered from the tax collection agency where they were filed. But, business records related to purchases of property and capital improvements and depreciation, and related to divorces, can be relevant for decades after they were created, so the more honorable course of action would be to make at least a cursory effort (such as a postcard sent to a last known address of each client with a deadline for requesting a return of their file) to return the files of clients that include original business records as opposed to mere copies of tax returns. Oregon has a seven year retention rule for most purposes pursuant to Rule 801-030-0015(e) which is linked above: (e) Retention of attest and audit working papers. (A) Licensees must maintain, for a period of at least seven years, the working papers for any attest or compilation services performed by the licensee together with any other supporting information, in sufficient detail to support the conclusions reached in such services. (B) The seven-year retention period described in paragraph (A) of this subsection is extended if a longer period is required for purposes of a Board investigation as provided in paragraph (d)(D) of this rule and OAR 801-010-0115(3). The referenced rule in that rule states: (3) Requirements upon resignation. Upon resignation, a former licensee is required to: (a) Surrender the CPA certificate or PA license to the Board; (b) Take all reasonable steps to avoid foreseeable harm to any client, including but not limited to providing written notice of resignation under this section to all clients and inform all clients of where client records and work papers will be stored and of the clients’ right to secure copies of all such records and work papers at no cost to the client; (c) Maintain client records for a period of at least six years, or return such records to the client; and (d) Continue to comply with the requirements of OAR Chapter 801 Division 030 pertaining to confidential information and client records. (e) For the purpose of subsection (b) above and unless otherwise required by the Board, a resigning licensee of a registered firm is required to give written notice to only those firm clients for which the resigning licensee was the sole or primary CPA on an engagement, an engagement leader, or the client relationship manager. In practice, the consequences of destroying a record that shouldn't have been destroyed are likely to be minimal, because any recovery would be limited to the assets of the estate and there is a time limit for making claims against estates which is quite strict, and your grandma has no license to revoke. But, again, the honorable thing to do in order to honor her legacy and do right by her former clients would be to either transfer the records to a successor firm or to attempt to return them, as she would be required to do if she had surrendered a license during life.
My understanding is that the "flow-through" treatment is specifically a tax law concept. The LLC has its own income, which it can use to pay expenses or acquire assets or for whatever other purpose, and such assets become the property of the LLC. It's just that when it comes time to pay taxes, the LLC's net income is taxed as income to the owner. But that does not mean that the LLC's income is treated the same as the owner's income in all other legal contexts.
"Legal requirement" can and in this case simply means "it's what is required in order for us to be reasonably able to offer you this service", noting that it would be unreasonable for such a dangerous business to operate, when one moron slipping and suing them could put them out of business. It's a little surprising that you've never had to sign a waiver before, but there are quite a number of similar waivers out there, such as REI (Seattle), The Edge (Vt), Croc Center (Coeur d'Alene), YMCA (MI) and U. Nebraska. They all have in common the requirement of a signature (indicating that you've waived your right to sue them), birth date, date of signature. This is the bare minimum that's required to have a valid waiver, and more info would be better (to uniquely identify the customer out of the 1000 John Smith's in the state and 500,000 in the US). If you break yourself and try to sue, they will trot out the waiver to put an end to the suit. Name, address, phone number and birth date do a long ways towards proving that the person who signed the waiver is indeed you.
That will depend on the specific provisions of Turkish law (in the example case) and the provisions of the tax treaty between Turkey and the US. The Turkish resident will probably have to file with Turkey. To what extent s/he will get credit for taxes paid to the US, and indeed to what extent income from a US company is taxable under Turkish law will depend on the specifics of Turkish law and of any treaty, and may well be different in a different country.