Navigating U.S. Tax Compliance as a Non-Resident Amazon Seller
U.S. tax compliance for non-resident Amazon sellers is complex. Two sellers could have nearly identical business models but very different tax obligations depending on how the IRS views their U.S. business activity and how their CPA interprets tax laws.
There’s no one-size-fits-all answer, but there are recurring misinterpretations that often lead non-resident sellers to either overpay or underpay their U.S. taxes. After working with top U.S. tax attorneys, CPAs, and my tax and legal mastermind group, I’ve compiled the most critical areas where confusion happens and where U.S. tax mistakes are made by non-resident Amazon sellers.
If you’re selling on Amazon.com through a U.S. LLC or a foreign entity, here are the six key areas where tax law is often misunderstood—and where getting it wrong could be costly.
1. Thinking W-8BEN or W-8BEN-E Means No U.S. Tax Obligation
Many non-resident sellers assume that submitting Form W-8BEN or W-8BEN-E to Amazon means they have no U.S. tax responsibilities.
This is not true. Filing these forms only certifies your foreign status for tax withholding purposes—it does not determine whether you must file a U.S. tax return.
If you store inventory in Amazon’s U.S. warehouses (FBA), that may be a significant factor in determining whether you have U.S. Trade or Business (USTOB) and Effectively Connected Income (ECI). If so, the IRS may require you to file a U.S. tax return and pay taxes on your net profit.
2. Assuming No 1099-K Means the IRS Doesn’t Know About Your Sales
Amazon does not issue Form 1099-K to sellers who submit W-8BEN, but that does not mean your sales are invisible to the IRS.
Amazon still reports total marketplace sales in its corporate tax filings. The IRS can also cross-check:
- Customs import records
- Amazon’s internal sales data
- International wire transfers to foreign bank accounts
If you think you’re off the radar just because Amazon doesn’t issue you a 1099-K, think again.
3. Filing 1040-NR + Form 8833 to Claim “No Permanent Establishment”
Some sellers and even CPAs assume that if a tax treaty states they don’t have a Permanent Establishment (PE), they don’t owe U.S. tax.
However, PE rules in tax treaties apply to foreign corporations—not individuals using a U.S. LLC. The IRS determines USTOB & ECI under domestic tax law, and if you meet the criteria, the tax treaty does not override your U.S. tax obligation.
Filing Form 1040-NR with 8833 when it does not apply could lead to IRS rejection of the treaty claim, back taxes, penalties, and interest.
4. Believing No U.S. Office Means No U.S. Tax Obligation
You do not need a U.S. office, employees, or a physical presence to have a U.S. tax obligation.
The IRS evaluates how your business operates, not just where you’re located. If you store inventory in Amazon’s U.S. warehouses, that can be a key factor in determining whether you have USTOB & ECI.
This is where getting a second opinion from a tax professional who understands Amazon FBA tax issues is critical.
5. Working With a CPA Who Doesn’t Specialize in Non-Resident E-Commerce Taxation
Most U.S. CPAs are highly knowledgeable in domestic tax law, but many are not well-versed in the complexities of non-resident Amazon seller taxation.
U.S. tax law requires an analysis of multiple factors, and interpretations can vary. Some CPAs:
- Incorrectly apply tax treaty PE rules to U.S. LLCs
- Fail to recognize that Amazon FBA inventory alone may create a U.S. tax obligation
- Take an overly aggressive or overly conservative approach that doesn’t align with your actual risk level
Finding the right CPA isn’t just about experience—it’s about finding the right fit for your business model and risk tolerance.
6. Misapplying the “Dependent Agent” Rule to a U.S. LLC
The dependent agent rule applies under tax treaties to foreign corporations, not to non-residents using a U.S. LLC.
The IRS does not require a dependent agent to classify a seller as having USTOB & ECI under U.S. domestic tax law. If you own inventory in U.S. warehouses, you may still have USTOB & ECI, regardless of whether you have a U.S.-based agent.
If you’re structuring your U.S. Amazon business based on tax treaty PE rules instead of USTOB & ECI under U.S. law, you may be missing critical tax obligations.
Final Thoughts
U.S. tax compliance for non-resident Amazon sellers is not black and white. Two sellers could have the exact same business model and still reach different conclusions based on:
- Their CPA’s interpretation of the rules
- Their own risk tolerance
- How aggressively or conservatively they structure their U.S. tax filings
If you’re selling on Amazon through a U.S. LLC or foreign company and are unsure about your tax position, getting a second opinion before filing is one of the smartest business moves you can make.
Disclaimer
This post is for informational purposes only and should not be considered tax or legal advice. Every business is unique, and the IRS has more rules than Amazon has sellers. If you’re serious about protecting your profits and staying compliant, take the time to get the right tax strategy in place before the IRS makes that decision for you.
