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Question 243: John, a U.S. citizen living overseas, forms a single-member LLC in the U.S. (no election to be treated as a corporation) in order to enter into a services agreement with an unrelated foreign company. The LLC invoices the foreign company, and then distributes out the revenue as salary to John. Would an employer/employee relationship between John and the foreign company under U.S. tax principles (e.g., Rev. Rul. 87-41) for the reason that the LLC is merely an invoicing entity? If John were actually (in form) an employee of the foreign company, then he would not be subject to FICA or SE tax. |
Answer: It is certainly possible, but the answer should turn on the facts and a current analysis of the situation, not on whether John wants to pay FICA or SE tax. |
Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner or to readers. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of this and similar situations.
The law in this area changes frequently. Answers are believed to be correct as of the posting dates shown. The completeness or accuracy of a particular answer may be affected by changes in the law (statutes, regulations, rulings, court decisions, etc.) that occur after the date on which a particular Q&A is posted.
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