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Foreign Nationals Doing Business on eBay in the United States

Q: "I am a citizen of Peru. For the past couple of years, my husband and I have been living in the United States on a student visa. We have paid U.S. taxes throughout this time. During our time in America I started selling things on eBay. My husband and I will be returning to Peru in a few months, and I want to keep this business going. I want to take PayPal payments, but the PayPal rules say you must have a bank account in the United States. PayPal currently does not operate in Peru. Is there any way I can operate legally in the United States without actually being a resident or citizen? I am more than willing to pay United States taxes."

A: Under current rules, you don't have to be a citizen or permanent resident of the United States to operate a business here legally. You need to talk to an attorney for specific advice, but here is one way it might work (no guarantees, now).

First, find a state (such as New Hampshire) in which there are no state or local income, sales, or other business taxes—if your business has any sort of presence in a state, you are considered to have a nexus there and must pay that state's sales, use, and other business taxes.

Then, hire an attorney in that state and set up a limited liability company (LLC) with yourself as the sole owner (you cannot form a Subchapter S corporation because you are not a U.S. citizen or green card holder). For a small annual fee, the attorney (or a registered agent service such as National Corporate Research Ltd., nationalcorp.com) acts as your registered agent in that state and makes sure all LLC paperwork is forwarded to your attorney so that he or she can deal with it.

Next, find a UPS Store or Mail Boxes Etc. in the state where the LLC is located (theupsstore.com or mbe.com) and obtain a private mailbox there. This is like a post office box except that you actually get a street address (such as "123 Main Street, # 456, Anytown, Anystate, USA"). Use the mailbox address as your LLC's business address, and instruct the UPS Store employees to forward all mail in the mailbox overseas to you (or to your U.S. attorney) at least once a month.

Then, obtain an Individual Tax Identification Number (ITIN) from the IRS (for details. go to irs.gov, click on Forms and Publications, and download IRS Publication 1915 along with IRS Form W-7). An ITIN is like a Social Security number for people who are not U.S. citizens or green card holders. It does not give you the rights that citizens have—for example, you cannot vote in U.S. elections or receive Social Security benefits. But with an ITIN you should be able to open a bank account (an LLC with one owner and no employees is not currently required to obtain a federal tax ID number), which in turn will enable you to set up a PayPal account for your business.

Finally, hire a good accountant in the state where your LLC is located, and pay him or her well to file U.S. federal tax returns and pay taxes for the LLC each year. But be very careful—the IRS has been tightening the ITIN requirements to prevent abuse. Also, keep in mind that after the terrorist attacks of September 11, 2001, the federal government watches these arrangements closely to make sure there is no illegal money laundering going on. If the U.S. government even suspects your business is a front for a terrorist operation, they will come down on you with full force. Don't say I didn't warn you!

Q: "I am looking into opening a business on eBay. I am from France, currently doing an internship as part of my education requirements at a university in the United States. I am on an F-1 (student) visa, I have an Individual Tax Identification Number (ITIN), a bank account for four years, and a state driver's license. I looked into applying for an E-1 visa (entrepreneur visa) but I realize that you need $1 million to open one, and I won't be making that kind of money for quite some time. Are there any other kinds of business I can operate legally in the United States while I am here?"

A: I am not an expert on F-1 visas, but I do know they strictly limit what you can and cannot do while you are in the United States. You are supposed to be studying here and getting a degree that will help you get rich when you return to France. You are not here to get rich at the expense of your U.S. competitors. You really need to talk to an immigration attorney to find out what you can and cannot do in the United States with an F-1 visa (to find one near you, go to findanimmigrationattorney.com, lawyers.com/immigration, or findlaw.com). But take a look at the answer to the previous question— it may give you some ideas.

Also, there is absolutely nothing to prevent you, as a French citizen, from setting up a French company with your relatives in France and selling stuff on eBay France and other French e-commerce websites. And if your French company is also selling on eBay in the United States...

Repatriation Laws and Selling Antiquities and Cultural Heritage Items on eBay

Q: "I sell ancient Roman coins on eBay. I've been reading about foreign governments suing U.S. museums and auction houses over the sale of items that were illegally looted from archaeological sites and graves in their countries. Is that a risk for eBay sellers? How can I find out if an item I'm selling might be seized by a foreign government?"

A: Yes, it is a risk, and it is likely to be a growing issue for eBay sellers in the future, especially those selling antiquities (items more than five hundred years old) or high-value artwork and antiques from other historical periods. At the time this is being written:

• The government of Cyprus has retained U.S. law firms to search for Byzantine icons and other religious items that may have been illegally looted from churches on the island during the Greco-Turkish civil war of the 1960s and 1970s.

• A number of Jewish organizations regularly troll auction catalogues and listings looking for artwork and religious items that may have been looted by the Nazis or Russian troops during the Holocaust.

• The British government strictly forbids export of items—including Roman coins—dug up by metal detector hobbyists without an evaluation by the local coroner's office (!) and the issuance of a certificate declaring the item to be "without historical or cultural value" and permitting the item to be exported.

• The government of China currently forbids the export of any antique or artwork more than one hundred years old without an export permit.

• On the domestic front, the National Museum of the American Indian in Washington, D.C., maintains a repatriation service that will put you in touch with the appropriate tribal authorities if you suspect a Native American artifact you own was illegally looted from a Native American gravesite.

There is currently no foolproof way to determine whether an item you're selling on eBay will be seized by a foreign government, other than to do your best to determine the provenance of an item when you acquire it and deal only with low-priced or common items (such as Native American arrowheads or low-grade Roman coins) that are unlikely to attract scrutiny as having "significant historical or cultural value" by the country of origin.

When in doubt, have the item reviewed by an established, reputable dealer in antiquities and get an opinion (preferably in writing) as to the likelihood of it being a "cultural patrimony" item you will have to repatriate to the country of origin. Any dealer who is a member of the London-based Antiquities Dealers Association (theada.co.uk), the National Antique & Art Dealers Association of America (naadaa.org), or the Antique Dealers Association of California (antiquedealersca.com) should fit the bill. Avoid dealing with "antiquities experts" who advertise in the back pages of popular magazines such as Archaeological Digest or Biblical Archaeology Review, because many of these folks are not dealing in genuine antiques but, rather, in what are euphemistically called "genuine replicas."

 
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