I'm a freelance software developer working from Eastern Europe over
the Internet. I have ongoing projects for a US company which
periodically pays me consultancy fees *directly* to my US bank
account. I've got an ITIN (a US Individual Taxpayer Identification
Number from IRS) on file with my bank account.

Now I'm going to visit my US client 2-3 times a year on a B-1 visa
(for no more than three weeks during one stay). So I'm a non-resident
alien according to IRS Tax Guide
[http://www.irs.gov/pub/irs-pdf/p519.pdf]. It's important to mention
that I don't work while I'm in the US, it's a business meeting to
coordinate the project's further development. I'm being paid for the
work I do when I'm in my home country - on contract basis, afterwards.

The question is, do I have to fill a US tax return and pay any taxes?
All my incomes are transparent for IRS, as I use a US bank account and
I have an ITIN.

Thanks in advance,
Cheers
Alex

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Request for Question Clarification by justaskscott-ga on 15 Jun 2003 22:03 PDT

I should emphasize the disclaimer at the bottom of this page, which
states that answers and comments on Google Answers are general
information, and not intended to substitute for informed professional
tax or legal advice.

As a layperson, my sense is that there is an issue that needs
clarification.  You say that you "don't work while I'm in the US, it's
a business meeting to coordinate the project's further development. 
I'm being paid for the work I do when I'm in my home country - on
contract basis, afterwards."  Does this mean that you are not being
paid anything for going to the meetings in the US?  To put it another
way, do the terms of your contract with the US client provide for
compensation only for the work you do outside the US?

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Clarification of Question by custsoft-ga on 15 Jun 2003 22:40 PDT

Thanks for coming back to me! To clarify, I do get compensated for
travel expenses, like air tickets and hotel, but that's it. The
reimbursement takes place once I've returned and sent an invoice for
my travel expenses.

Hello and thank you for your question.

Payment or reimbursement of travel and lodging expenses is
specifically exempt from US tax withholding, so your client can pay
those without diverting any of the funds for US taxes (nor would the
reimbursement constitute income to you):

"If you [i.e. your client] pay or reimburse the travel expenses of a
nonresident alien, the payments are not reportable to the IRS and are
not subject to NRA withholding if the payments are made under an
accountable plan as described in section 1.62-2 of the regulations.
This treatment applies only to that portion of a payment that
represents the payment of travel and lodging expenses and not to that
portion that represents compensation for independent personal
services."
 Travel Expenses 
http://www.irs.gov/businesses/small/international/article/0,,id=106256,00.html

The "accountable plan" is something US employers have for their
emplyees, and it should not be a problem.  The accountable plan
requirements of Reg § 1.62-2 only require that:
(1) a reimbursed expense be allowable as a deduction and be paid or
incurred in connection with performing services as an employee of the
employer, and (Reg § 1.62-2(d)(1))
(2) each reimbursed expense be adequately accounted for to the
employer within a reasonable period of time, and that any amounts in
excess of expenses be returned within a reasonable period of time (Reg
§ 1.62-2(d)(1))
Small Business Advisor
http://www.napiercpa.com/newsletter/nov99/page3.html

So your visit to the US should have no tax effect.

If you are in the US less than 90 days in the year, you also need not
be concerned that the IRS would require you to file a tax return for
your year's earnings before allowing you to depart:

"If the IRS has reason to believe that an alien has received income
subject to tax and that the collection of income tax is jeopardized by
departure, it may then require the alien to obtain a sailing or
departure permit. Aliens covered by this paragraph are:
....
Alien visitors for business on a B-1 visa, or on both a B-1 visa and a
B-2 visa, who do not remain in the United States or a U.S. possession
for more than 90 days during the tax year...."
International Taxpayer - Departing Alien Clearance (Sailing Permit)
http://www.irs.gov/formspubs/page/0,,id%3D108282,00.html

Search terms used (at http://www.irs.gov/index.html)
alien independent contractor
departing alien


Thank you for giving us the chance to help you with your question.  If
you find any of it unclear, please request clarification.  I would
appreciate it if you would hold off on rating my answer until I have a
chance to reply.

Sincerely,
Google Answers Researcher
Richard-ga

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Clarification of Answer by richard-ga on 16 Jun 2003 06:47 PDT

The material I quoted on the sailing permit question makes it appear
that aliens present less than 90 days might require a permit.  Not to
worry.  If you read the material in context on the cited page, you
will see that the less-than-90 category is exempt from the permit
requirement, as stated in my answer.

-R

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Request for Answer Clarification by custsoft-ga on 16 Jun 2003 07:55 PDT

Hello Richard,
Thank you for the comprehensive answer, everything is almost clear. I
won't certainly be staying in the US for more than 90 days a year. The
only concern is left, because my US bank probably reports the incomes
to IRS, wouldn't I be forced to explain the sources of incomes before
I leave? Well it's still a US company who pays contract fees to me. It
may be seen by IRS or INS as though I'm having incomes from US sources
while I'm physically present in the US, which is in conflict with my
B-1 visa status. Should I ask my clients to delay payments for the
past periods, so it won't overlap in time with my visit?

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Clarification of Answer by richard-ga on 16 Jun 2003 08:45 PDT

Hello again:

Since you don't want to undertake activities inconsistent with your
visa, I agree with your suggestion that you receive the reimbursements
and other payments after you are outside the US.

The ultimate question, although beyond the scope of your question, is
whether your client should be withholding 30% (or a lesser amount if a
treaty applies) on its payments to you for your services.
Publication 515, Withholding of Tax on Nonresident Aliens and Foreign
Corporations
http://www.irs.gov/pub/irs-pdf/p515.pdf

Cheers!
Richard-ga

Thanks Richard for all your help, it helps a lot. Cheers!