@caymandm wrote:
So you would not invoke the double taxation treaty alleging that the person has no permanent establishment in the US and has declared the income and paid taxes in their home country? Was that an oversight?
Person A, who is not a US citizen and does not live in the US, only owes a non-resident tax return for US-sourced income. Selling merchandise to customers inside the US does not create US-source income for person A as long as person A does not live or work in the US. However, person B, is a US taxpayer who apparently lent their name and bank account to the project, has some issues to deal with.
Person A needs to stop the business arrangement and find another way to get paid. I don't know this side of the business so I don't know if person A needs to open a US bank account, or can get their money deposited to a foreign account. The payment processor is correct to issue a 1099-K to the account holder who actually received the money, and is correct not to re-issue a W-8BEN for past payments. Person A needs to change the setup for future payments.
