You have several questions, let's see if I can provide answers.
1) I have lived in the US from 2002 to 2004 since I was studying. For
those years I filed my 1040 NR Form and paid some small tax. I have
only been to the US for vacation on 2005 and ALL the activities from
which the LLC derives profits have since been done from my home
country. Do I still need to file the return and pay income tax?
The answer has two parts - Delaware and US.
a) Delaware - two years ago, I asked a Delaware official. This is his response:
>From your email, it sounds as if your client is only incorporated in
> Delaware,but does not conduct business in Delaware. If this is the
case, >your client is exempt from filing a Delaware corporate income
tax return. >Corporations who only incorporate in Delaware and do not
>in Delaware, are exempt from filing an income tax return. Your client
>actual[ly] has to have physical presence in Delaware to be required to
>file a Delaware income tax return.
>Please advise if you need additional information.
>Ronald A Kaminski
>Wilmington, DE 19801
Now, you still have to file their franchise tax return, which is essentially
to inform them who the officers are and where they are located.
That has a small fee based on the number of shares of stock you have issued.
b) IRS - If you have a bank account in the US and you're doing
business in the US, you should be filing the tax return in the US.
The form you use will depend on how you file your LLC - probably,
as a corporation = Form 1120. [Note - you have 'nexus', a US presence.
Your site is hosted in the US (Texas), and your phone service (Vonage)
and address are in the US (Delaware). You probably collect credit
card payments in a US bank account.
There are no taxes unless the corporation shows a profit.
You will file Form 1120 and a Form 5472, since more than 25% of the company
is owned by a foreign person. You will report how much the corporation
pays you - as consulting fees, commissions or dividends.
If you receive dividends, naturally, you'll need to file a Form 1040NR
to report them and pay taxes on those dividends.
As a foreign person, if you receive consulting fees or commissions
for services performed in a foreign country, you don't have to report
that income in the US. Taxes are based on where the services were performed.
And you ask:
2) I am planning on opening an offshore corporation (outside the US).
Can this new offshore corporation become the sole propietor of the LLC?
Yes. You can sell or transfer the stock to the offshore corporation at cost.
However, you will still have to file the Form 5472, showing who the owner
is and how much your offshore corporation is receiving from the LLC.
I advise you to be careful when using another entity. IRS looks at
corporations owning corporations more carefully than at individuals
Read what IRS has to say about abusive offshore tax avoidance schemes.
And you ask:
3) Do the same principles of source of income apply when calculating
income tax if the LLC is owned by another company instead of an individual?
Yes. The corporation taxes are computed at the corporate level.
Naturally, you can file as a partnership instead of a corporation.
In that case, the taxes will be computed on the partners, themselves.
(That means more than one owner)
They will each have to file US tax returns. So if a partner is an
offshore corporation, the corporation will have to withhold 30% of
the profits to cover taxes until the partner files a US tax return.
This answer is designed to give you an overview of the situation.
There is no way that Google Answers can provide definitive information
for your situation. It's too complex.
Please, consult with a specialist who understands all the ramifications
of your plans. What you're hoping to do is workable, if you lay the
If you need some recommendations of tax professionals who understand
this area of tax law. I can provide some contacts.