Can an ITIN holder have their own US business?

Technical topics regarding tax preparation.
#1
gusser  
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I know they can't work as a W-2 employee but I see 1099-NECs with a TIN beginning with a "9" in the construction industry. Please confirm this is not allowed regardless of employee vs contractor status.

What if the non-US worker forms a SMLLC and submits a W-9 to the contractor with his ITIN?
 

#2
sjrcpa  
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Allowed by whom?
It may violate immigration laws, but it's still taxable income.
 

#3
gusser  
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sjrcpa wrote:Allowed by whom?
It may violate immigration laws, but it's still taxable income.


Allowed by theirs. I'm not worried about immigration, just what the feds would say if auditing the tax return. I think theirs would just ignore the ITIN and allow the deduction if the 1099 is filed. At least that's what I heard is happening currently.
 

#4
sjrcpa  
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I think the IRS would also ignore any immigration matters.
 

#5
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Immigration law does not permit anyone other than a SSN holder to work. It does not matter whether the person is employed, self-employed or a volunteer. My niece was most upset that she could not do voluntary work whilst waiting for her work permit.

I agree with sjr. I can’t imagine the IRS would be fussy. An ITIN, rather than a false SSN, might indicate that the worker is seeking to become legal. I did have a client years ago that employed several ITIN holders and people with fake SSNs. He got a call from NC employment security commission to say that he had one quarter to get them legal or off the payroll. Not sure if the state had that authority, but it focused his and his employees’ attention.
 


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