- quote -

There are usually three companies involved, not two. The
first is the US company which has elected to outsource some
function. The second is the foreign company which does the
actual work in the new arrangement. The third, not
mentioned in your question, is the US subsidiary of the
foreign company. The contract for outsourcing is between
the original US company and the US subsidiary of the
outsourcing company. The subsidiary files US taxes, but
probably has a negligible profit due to inflated charges
from the foreign parent.

If you are hoping to have the IRS go over the US company's
books, there's probably nothing there to investigate.

I am not a lawyer and this is not tax advice.

Hank Murphy
speaking only for myself.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

If a U.S. company outsources their work to a company in a
foreign country, what does the U.S. company need to report
to IRS, and where does the foreign company pay their taxes?

Thank you.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >