HenryDavid wrote:Seems like a bad idea for lots of reasons - why doesn’t his friend have a bank account?
cl2018 wrote:HenryDavid wrote:Seems like a bad idea for lots of reasons - why doesn’t his friend have a bank account?
What are the major reasons for being a bad idea?
cl2018 wrote:His friend is out side of the country and has no bank account here.
CaptCook wrote:cl2018 wrote:HenryDavid wrote:Seems like a bad idea for lots of reasons - why doesn’t his friend have a bank account?
What are the major reasons for being a bad idea?
Well, for starters....cl2018 wrote:His friend is out side of the country and has no bank account here.
If his friend doesn't want to register and do the things to properly set up and report the business he's running, your client ends up running the risk of bearing the consequences for anything else the friend has chosen to do that is improper.
Again...a bad idea.
Noobie wrote:Sounds dang close to money laundering...
Also a lot like tax fraud in the sense that you are assisting a person with getting around the tax law/reporting of income by being the middleman/woman.
ManVsTax wrote:It is not that hard for a foreign individual to form a US LLC or US corporation, obtain an EIN, and open a US bank account for said LLC or corporation.
Sounds dang close to money laundering...Also a lot like tax fraud in the sense that you are assisting a person with getting around the tax law/reporting of income by being the middleman/woman.
Jeff-Ohio wrote:Sounds dang close to money laundering...Also a lot like tax fraud in the sense that you are assisting a person with getting around the tax law/reporting of income by being the middleman/woman.
I don’t know if I’d go that far. I’ve seen these situations before…some foreign person or entity doesn’t do what ManV suggests in Post #7 and routes everything through a bank account in the name of it’s U.S. salesperson. The ones I’ve seen are pretty legit. Usually its because the foreign person doesn’t know the rules, or doesn’t yet want to take a full-fledged plunge (i.e. it might not work out in the U.S., so let’s not invest a bunch in structuring, etc.). I do suppose though, that what we’re dealing with here is a low level foreign operator. Regardless, these situations make me very uncomfortable. If the U.S. person gets audited, the first thing the IRS asks for is bank statements. And then we have to explain ourselves. The last time we had one of these, we told the client to stop doing it the way the foreign enterprise was doing it. Foreign entity ended up doing it the right way.
cl2018 wrote:Should he report the transactions in tax return, assuming He will remit net profit to his friend leaving himself zero profit. Thanks!
ItDepends wrote:cl2018 wrote:Should he report the transactions in tax return, assuming He will remit net profit to his friend leaving himself zero profit. Thanks!
It depends.
What are the circumstances and facts as to why the taxpayer would be volunteering these services and not receive any money for the services rendered (and not considering the money going into his bank account as "his" money)?
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