Hello ALTA!
In regards to LLC is simple, if the LLC is a "Sole Member" type of LLC the IRS considers this type on entity disregarded, meaning, it does not look at the company but the foreign status of the owner (for FIRPTA purposes in this particular case), make sure you have a copy of the IRS SS-4 letter, this is a letter the IRS issues to assign the EIN, below an example of this letter and what you have to look for. This "Sole Member" is always specified on the letter and the activity of this entity is included on the Sch C of a 1040 or 1040NR.
If you have a corporation then the same letter can say "member", or "Inc." the letter specifies what type of return the U.S. entity has to file to the federal government, on top of the state filings, the entity must be current with all the returns filings. (state and federal)
This is probably the easiest way for you to identify if you are dealing with FIRPTA when presented with "LLC" documents. If it is a "Sole member" FIRPTA applies to the individual, if it is a proper U.S. corporations don't worry about it, it is the corporation that has to send the FIRPTA withholding before distributing the proceeds to the partner, shareholder, member etc…
As always reach out to a licensed tax professional expert in FIRPTA matters.
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Mary Enzi CAA
Tax Solutions – FIRPTA Consulting
[email protected]
+1 (281) 578-1040
Katy TX
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