The managing member of the LLC is a resident alien. He receives no funds from any other country. He has no business dealings in any other country. He is married to a U.S. citizen. He has a green card. Last year he indicated that he was not a U.S. citizen and the IRS indicated that we had indicated that the LLC had a foreign partner. However, he has lived in the U.S. for over 35 years and has no property, assets, or dealings outside the U.S. Is he really a foreign partner? If not, how can we fix the filing from last year?
For tax purposes a resident of the USA ( green card holder ) is not a foreign person. You may have to amend the original filing. The best way would be to seek help from a tax professional or a tax attorney -- only because IRS has taken a position based on your filings and therefore would be reluctant to change. Also you could consider having the managing member of the LLC resign , induct his citizen spouse as the member and then she appoints the husband as her POA. But you really need to discuss this with an attorney.
For tax purposes a resident of the USA ( green card holder ) is not a foreign person. You may have to amend the original filing. The best way would be to seek help from a tax professional or a tax attorney -- only because IRS has taken a position based on your filings and therefore would be reluctant to change. Also you could consider having the managing member of the LLC resign , induct his citizen spouse as the member and then she appoints the husband as her POA. But you really need to discuss this with an attorney.
This issue is due to incorrect wording in the TurboTax for Business software. When filling in the Partner information, it simply asks is the partner a US citizen. Selecting no, immediately classifies them as a Foreign person. I'm surprised this has not been caught yet, this is a major issue and causing taxes to be filed incorrectly. Where do I create a report about this?
To clarify, is the partner a US person? If it isn't a US person, it is a foreign partner. If not a US or Foreign partner, how should your partner be classified?
Yes they are a US person. Problem is the TurboTax software only asks if they are a US Citizen, and sets it to foreign when you select no. The wording needs to be changed.
I actually just got off the phone with the IRS after receiving a notice from them about this. They will be updating my file to indicate that this was done in error and partner is not a foreign partner.