Stripe Atlas / Firstbase Aftermath: When the Automation Stops

You paid a few hundred dollars, answered a dozen questions, and had a U.S. entity with an EIN inside a week. That part worked exactly as advertised. What follows is a list of eight things that were never inside the scope of what you bought, each one written so you can check it against your own setup tonight.

What an incorporation service is scoped to do

It is worth being precise here, because the useful version of this article is diagnostic rather than accusatory.

Stripe Atlas forms a Delaware entity, obtains an EIN, provides a registered agent, generates founder equity documents, and handles the IRC §83(b) election filing. Its own terms state that Atlas is a technology service providing legal information and self-service tools, that it is not a law firm, and that information provided through it is not legal, tax, or accounting advice. Firstbase forms LLCs and C corporations, provides registered agent and mail services, and separately sells compliance and tax filing products.

These are formation and administration services. They execute a defined set of filings competently and quickly. What they do not do, and do not hold themselves out as doing, is analyze whether your particular pattern of income is taxable in the United States, whether you have a treaty position, and what reporting attaches to a foreign owner. Those are conclusions about facts the platform never collected. Saying so plainly is not a criticism of the product. It is a description of the boundary, and the boundary is where founders get hurt.

Eight checks to run against your own structure

Check 1: Is there a Form 5472 on file for every year the entity has existed?

If your U.S. LLC has a single owner and that owner is a foreign person, Treas. Reg. §301.7701-2(c)(2)(vi) treats the entity as a separate domestic corporation for purposes of IRC §6038A. The filing is a pro forma Form 1120 carrying a Form 5472, sent by fax to 855-887-7737 or by mail to the IRS at 1973 Rulon White Blvd., M/S 6112, Attn: PIN Unit, Ogden, UT 84201. The failure penalty is $25,000 for each taxable year under IRC §6038A(d)(1), with a continuation penalty of $25,000 per 30-day period after 90 days from IRS notice under IRC §6038A(d)(2).

How to check: look for a Form 1120 with a 5472 attached for every year since formation, including the stub year in which nothing happened. Capital contributions and owner draws are themselves reportable transactions.

Check 2: Does any payer of yours hold a current Form W-8BEN-E?

Payment processors, marketplaces, affiliate networks, and U.S. customers are withholding agents. Absent valid documentation, the withholding agent may apply 30 percent under chapter 3, the backup withholding rate, or the IRC §1446 rate. A Form W-8BEN-E is generally valid from the date it is signed through the last day of the third succeeding calendar year, and a change in circumstances must be reported to the withholding agent within 30 days.

How to check: log into each account that pays you and find the tax documentation section. Note the entity name on the form, the date signed, and whether Part III was completed. An expired form is functionally the same as no form.

Check 3: Has a treaty residency position ever been documented?

A treaty claim on Part III of Form W-8BEN-E asserts residence in a treaty country, derivation of the income, and satisfaction of the limitation on benefits article. Assertion is not proof. Where a foreign payer or authority asks the United States to certify residency, the instrument is Form 6166, obtained by filing Form 8802. A user fee applies, and it differs for individual and non-individual applicants; check the current figure in the Form 8802 instructions before you file. The IRS advises applying well ahead of the date the certification is needed.

How to check: identify the treaty country, the article number you are relying on, and the limitation on benefits test you satisfy. If you cannot name all three, the position is untested rather than established. Note also that a U.S.-formed entity is a U.S. person for treaty purposes, so the treaty question usually attaches to you or to a foreign parent, not to the LLC.

Check 4: Do you understand what your U.S. address actually is?

Registered agent service is a statutory requirement, not a place of business. A virtual mailbox is a mail-handling contract. Neither creates an office, and neither is by itself a fixed place of business.

This cuts both ways and both directions matter. Founders sometimes assume the registered agent address gives them a U.S. presence that justifies a claim, and separately assume that having "only an address" settles the question of whether they have a U.S. trade or business. Neither assumption is safe, because the test under IRC §864(c) looks at what activity occurs and who conducts it, not at what appears on the letterhead. The address does have a practical effect: it drives where IRS correspondence goes, and an unforwarded notice under IRC §6038A(d)(2) is what turns a fixed penalty into an accruing one.

How to check: confirm who physically receives IRS mail sent to the entity, and confirm that person forwards it to you within days rather than months.

Check 5: Are the state filings actually current?

Delaware corporations owe franchise tax and an annual report by March 1, with a minimum of $175 under the authorized shares method or $400 under the assumed par value capital method, a $50 report fee for non-exempt domestic corporations, and a $200 penalty plus 1.5 percent monthly interest for late filing. Delaware LLCs owe a flat $300 by June 1 and file no annual report, with the same penalty and interest structure. Wyoming charges the greater of $60 or two-tenths of one mill per dollar of assets located and employed in Wyoming, due the first day of the entity's anniversary month.

Drift here is quiet. The state does not chase you, the entity's status degrades, and you discover it when a bank or an acquirer asks for a certificate of good standing.

How to check: pull the entity record on the Delaware or Wyoming Secretary of State portal and read the status field yourself rather than trusting a dashboard.

Check 6: Is the responsible party on the EIN record still correct?

The EIN application names a responsible party. Where formation was handled by a third party, the record sometimes reflects the wrong person or an outdated address. An entity with an EIN is required to report a change in its responsible party on Form 8822-B within 60 days of the change.

How to check: locate the EIN confirmation letter, CP 575 or 147C, and read the name and address on it. If either is wrong or stale, that is a correctable filing, and correcting it also fixes where notices are delivered.

Check 7: Do you know your entity's tax classification, and did anyone confirm it?

A single-member LLC is disregarded by default under Treas. Reg. §301.7701-3(b)(1)(ii). Adding a second member makes it a partnership, with IRC §1446(a) withholding on effectively connected taxable income allocable to a foreign partner at the highest rate under IRC §1 for a noncorporate partner and the IRC §11(b) rate of 21 percent for a corporate one. A corporation is a corporation per se under Treas. Reg. §301.7701-2(b)(1). Where a corporation was formed and stock issued subject to vesting, the IRC §83(b) election has a 30-day window that does not reopen.

How to check: confirm how many members or shareholders the entity has today, whether any Form 8832 was ever filed, and if stock was issued subject to vesting, whether the §83(b) election was actually mailed and evidenced.

Check 8: Has anyone written down why your income is or is not U.S. source?

This is the check that determines the size of everything else, and it is almost always the missing one. Compensation for labor or personal services is sourced by place of performance under IRC §861(a)(3) and IRC §862(a)(3). Gain on the sale of personal property is generally sourced to the seller's residence under IRC §865(a), with inventory rules of their own. Whether income is effectively connected turns on IRC §864(c), including the asset-use and business-activities tests of §864(c)(2).

How to check: can you produce a one-page file memorandum stating where your work is performed, who performs it, where your contractors are, where your servers are, and which sourcing provisions you are relying on? If not, you do not have a position. You have an assumption.

How to read what you found

Sort the results into three groups rather than treating them as a flat list.

• Accruing. Missing Form 5472 filings are the only item on the list with a per-year penalty attached and a limitations period that has not started, because IRC §6501(c)(8) provides that the assessment period does not expire before three years after the required information is furnished. This group goes first regardless of what else is open.
• Bleeding. Missing or expired withholding documentation costs money on every payment until it is fixed. Nothing accumulates as a penalty, but cash leaves continuously and recovering over-withheld amounts is a separate refund process.
• Latent. An unwritten sourcing position, a stale responsible party record, and lapsed state filings do no damage until something forces the question. They matter at diligence, at bank review, and at examination.

The order to fix things in

Sequence matters more than speed, because several of these depend on each other.

1. Establish the sourcing position first. Almost every other decision, including which forms are even required, follows from whether the income is effectively connected under IRC §864(c).
2. Correct the EIN record and the mail path second, so that any IRS correspondence generated by the steps that follow actually reaches you.
3. Bring the §6038A filings current, oldest through current year, one pro forma Form 1120 and one Form 5472 per year. Where the failure was genuinely inadvertent, Treas. Reg. §1.6038A-4(b) provides for reasonable cause established by an affirmative written statement under penalties of perjury, and directs liberal application for entities with gross receipts of $20,000,000 or less that had limited U.S. contact and complied promptly once informed. That is a case you build with evidence, not a box you tick.
4. Refresh withholding documentation with every payer at once, since the forms are dated and staggering them creates gaps.
5. Restore state standing last. It is the least urgent and the most easily cured.

Where to start tonight

Open three tabs: your state's entity search page, your payment processor's tax documentation settings, and the folder holding your EIN letter. Fifteen minutes across those three will tell you which of the eight checks above are actually open. If more than two are, the structure needs a full review rather than a patch, and that structural review is what the firm's diagnostic is for. Broader context on how these structures are assembled and repaired sits on the incorporation architecture pillar. This article is general information about the cited provisions and platform terms, not advice on your situation.