Partnership Based LLC Registered in NJ

A domestic LLC organized in New Jersey is classified as a partnership for U.S. federal tax purposes. It has two 50/50 nonresident alien partners (Pakistan residents) who were never physically present in the United States during the tax year.

The partnership provides consulting/services exclusively performed outside the United States (all services performed in Pakistan). All clients are U.S. customers, and payments are remitted to a U.S. bank account held in the LLC’s name.

The LLC has no U.S. employees and no leased office space. However, a U.S.-based individual (0% ownership interest) is listed as the “responsible party” on Form SS-4, manages the U.S. bank account, and performs bookkeeping/administrative functions from a home office in the U.S. This individual does not negotiate contracts, perform services, make strategic business decisions, or participate in income-generating activities. Client contracts are executed in the LLC’s name.

Given these facts:

1. Would the partnership be considered engaged in a U.S. trade or business under §864(b)?
2. Would the service income be considered U.S.-source under §861(a)(3), given that all services are physically performed outside the United States?
3. If the income is foreign-source and no income-producing activities occur in the U.S., would the partnership nevertheless have Effectively Connected Income (ECI)?
4. Under these facts, is Section 1446 withholding required on the foreign partners’ distributive shares?

In other words, does the administrative/banking presence in the U.S. create a U.S. trade or business sufficient to treat the partnership’s foreign-performed service income as ECI?