Do Non-US Amazon and E-Commerce Sellers Owe US Tax?

Two separate questions: income tax and sales tax

The most useful thing a non-resident seller can understand up front is that "do I owe US tax" is not one question but three, each with its own answer. US income tax asks whether your profit is taxable in the US. The Form 5472 information return asks whether your foreign-owned US company had reportable dealings with you, regardless of profit. State sales tax asks whether you must collect and remit tax on sales into a given state. You can owe one and not the others, and the common mistake is answering all three with a single guess.

The rest of this guide takes them one at a time. If you have not formed the company yet, the best-state-to-form-an-LLC guide and the Form 5472 guide are natural companions.

Do you owe US income tax? ECI and ETBUS

Whether a non-resident owes US income tax on selling profit turns on two linked concepts: whether you are engaged in a US trade or business (ETBUS), and if so, whether your income is effectively connected to it (ECI). Only effectively connected income is taxed at regular US rates on a net basis. This is a facts-and-circumstances test, not a bright line, and having a US LLC or US customers does not by itself decide it.

In practice, many sellers who run everything from abroad, with no US staff and no dependent US agent, take the position that they are not engaged in a US trade or business and so have no US income tax on their selling profit. Others clearly do have ECI, for example when they build out US-based operations, staff, or a fixed place of business. Because the answer drives whether you file a US income tax return at all, it is worth reaching a documented position rather than assuming, and treaty provisions can change the result for residents of treaty countries.

The Form 5472 filing your LLC still owes

If you sell through a foreign-owned single-member US LLC, that LLC is a disregarded entity for income tax but is treated as a separate corporation solely for one purpose: filing Form 5472 with a pro-forma Form 1120. It is due for any year the LLC had a reportable transaction with you, and forming and funding the company both count as reportable transactions. This applies even in a year with no profit and even when you owe no US income tax.

The penalty for filing Form 5472 late is $25,000 per form, which is why the small information return is worth handling on time. The full mechanics, including what counts as a reportable transaction and how to get an EIN without an SSN, are in our dedicated Form 5472 guide. The short version for sellers: this is the filing most often missed, and it is separate from both income tax and sales tax.

Sales tax nexus from FBA inventory

State sales tax is a separate system from federal income tax, and it can reach a non-resident seller who owes no US income tax at all. Two things create a sales tax connection, or nexus, with a state: physical presence and economic activity. For Amazon FBA sellers, the physical-presence trigger is often inventory: when Amazon stores your goods in a fulfillment warehouse in a state, that stored inventory can create physical nexus there.

• Physical nexus: inventory held in a state (including FBA warehouses), an office, or staff
• Economic nexus: crossing a state revenue or transaction threshold, often around $100,000 in sales or 200 transactions
• Marketplace facilitator rules: Amazon and similar platforms collect and remit sales tax on marketplace sales in most states
• Off-marketplace sales: your own Shopify or direct sales are not always covered by a marketplace, so your own registration may still apply

The practical result is that marketplace facilitator laws remove much of the collection burden for Amazon sales, but they do not automatically clear every registration or filing obligation, especially once you sell off-marketplace. A nexus review tells you which states you actually have obligations in, so you register where you must and not everywhere by default. Our e-commerce and Amazon seller services handle that analysis and the resulting registrations and filings.

What a non-resident seller actually files

Putting the three questions together, a typical non-resident seller operating through a foreign-owned single-member US LLC looks at the following each year. Your own facts may add or remove items, which is exactly why a short scoping conversation is useful.

Foreign-owned sellers often fold these recurring filings into one annual compliance membership so the calendar is handled in one place, prepared and signed by an Enrolled Agent.

Frequently asked questions