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If you are a U.S. citizen or permanent resident residing in the United States, then there are a number of tax issues you need to consider. Depending on how the interests in the LLC are held and the activities in which the LLC engages, the LLC or its members may have to file a number of tax compliance documents. These compliance documents have to be filed whether or not taxes are due in the United States. You need to consult with your tax advisor to ascertain what documents have to be completed.
The Antiguan LLC Classification for US tax purposes
Under IRS default rules the Antiguan LLC will be a foreign eligible entity for U.S. tax purposes. An eligible entities includes any foreign entity that is not identified as a corporation under Regulations Section 301.7701-2(b)(8) which lists various countries and their entity classification. The Antiguan LLC is not on the list (at the time of publishing this website) and therefore is an eligible entity. (You should however check the regulations to see whether this remains true). Generally, a foreign eligible entity is classified for tax purposes as follows (in the absence of another election):
- A partnership if it has two or more members and at least one member does not have limited liability.
- An association taxable as a corporation if all members have limited liability.
- Disregarded as an entity separate from its owner if it has a single owner that does not have limited liability.
In this case, because all members of the LLC have limited liability, the Antiguan LLC will be classified as a corporation by default. However, if the members of the LLC prefer it to be classified as a partnership or if there is only one member, as a disregarded entity, then the LLC may make an election by filing form 8832. An eligible entity uses Form 8832 to elect how it will be classified for federal tax purposes - as a corporation, a partnership, or an entity disregarded as separate from its owner. You may file form 8832 for an eligible entity (the Antiguan LLC) where the following elections are desired:
- A foreign entity that has more than one owner, all owners having limited liability, electing to be classified as a partnership.
- A foreign entity with a single owner having limited liability, electing to be an entity disregarded as an entity separate from its owner.
- A foreign entity electing to change its current classification (even if it is currently classified under the default rule).
In an effort to assist you with proper US federal tax compliance, we have provided a list of some of the tax forms that may be necessary to be filed by the LLC or its members. Please consult with your tax advisor to determine which forms, if any, are necessary.
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