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I am in talks with various international banks in India who're ready to provide us a US based bank account provided we meet their minimum balance requirements in a local bank.

A US based account will help us reducing time it takes to process US checks and maybe save some payment gateway fee if we ask our clients to directly deposit the amount using online baking.

Just wondering, will I be subjected to US income tax if I am getting money in my US bank account? given that I don't reside in US nor am a US citizen.

[Some details: I don't have an US SSN. I am an Indian resident who owns a startup.]

Update: Please note I am NOT looking for info on "How to open a US based bank account"

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2 Answers

IANAL, but you should consider the relevant state and federal documents to determine whether "financial transactions" would pass the test of "doing business". A good example of a how New York determines how it defines foreign corporation "doing business" is here.

However there are some differences of opinions regarding taxation: from delawarecorp.com (not the state site):

Citizens of countries other than the United States are often concerned with the tax consequences of owning an entity such as a limited liability company. A Delaware LLC that (1) carries on no business in the U.S., (2) derives no income from any sources within the U.S. and (3) has not elected to be treated for tax purposes as a corporation does not need to file a U.S. tax return or a Delaware tax return.

Under the current IRS "check-the-box" rules, a Delaware LLC that does not affirmatively elect to be treated for tax purposes as a corporation will be treated for federal tax purposes as a partnership. It will be treated as a partnership for Delaware tax purposes as well.

Under current Treasury Regulations, a partnership that carries on no business in the U.S. and derives no income from any source within the U.S. does not need to file a tax return. Delaware law currently provides that a partnership need file a return only if it has income from sources within the State of Delaware.

If the LLC has only one member, then for federal tax purposes the LLC is disregarded, and the sole member is taxed as a sole proprietor. Current Treasury Regulations provide that a nonresident alien who is not engaged in a U.S. business and who does not derive any income from any source within the U.S. does not have to file a tax return. Similarly, Delaware law currently provides that a nonresident alien having no income from sources within the State of Delaware does not have to file a Delaware return.

I don't quite know how one would be able to accept payments in the US from US companies and and assert that the company "derives no income from any sources in the US."

That said, I wouldn't trust anyone's opinion on this matter except your lawyer.

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This is a burning question for everyone in India relating to technology business. More so because in many mobile platform, you can not market your application without having a bank account in USA.

I have googled this aspect for my own company and the results were not very encouraging. It is difficult to open an account without visiting USA. One bank I found could open account without visit, but the minimum balance requirement was very high.

Any pointer in this regards will be highly appreciated and

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more than tax impact it can have impact on Foreign Exchange Regulation. – Natwar Lath Dec 22 '11 at 14:07
We're fine with the minimum balance requirements. At this point looking into tax implications. What ForEx regulations are you talking about here? – Ankur Jain Dec 22 '11 at 14:26
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Natwar, answers are meant to provide answers, to ask your own question, create a new question. – Krzysztof Kowalczyk Dec 23 '11 at 4:45
I never meant asking question. I regret of jumping to certain conclusion. Being a qualified tax professional, I thought from every aspect of the transaction. So far taxation in India is concerned any income earned by LLC is not taxable in India as the activity is being carried outside India and it is registered outside India. – Natwar Lath Dec 23 '11 at 9:01
I never meant asking question. I regret of jumping to certain conclusion. Being a qualified tax professional, I thought from every aspect of the transaction. I went through the question again. I feel it is not taxable in USA but in India. The bank will need to withhold taxes (TDS in India). This can be overcome by submitting them appropriate declaration and forms. The concerned bank should be able to tell if they are going to withhold tax and what formalities are required to stop such withholding. – Natwar Lath Dec 23 '11 at 9:07

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