Will Newegg act as importer of record for SBN shipments?

No. Newegg's international inbound guide says it won't be importer of record for any SBN shipment, whatever its size, value, origin or product. Inbound shipments must be DDP, and shipments arriving with collect charges are refused. A foreign seller without a U.S. entity can import as a non-resident importer through a broker holding its CBP power of attorney.

Does a Chinese company selling only through SBN owe U.S. federal income tax?

It depends on the facts. Continuous U.S. sales from U.S. warehouses with U.S. delivery are generally a U.S. trade or business producing effectively connected income. Under the U.S.–China treaty, facilities used solely to store and deliver goods aren't a permanent establishment, and SBN warehouses belong to Newegg, so the company can claim its business profits aren't taxable in the U.S. U.S. employees, an office or a contracting agent can change that.

What about state tax on inventory in a California SBN warehouse?

State taxes aren't covered by the treaty. Inventory in California is property there; above the Franchise Tax Board's annually adjusted threshold the company is doing business in California, files, and pays at least the $800 minimum franchise tax. Indiana applies its own rules. Newegg collects sales tax on platform orders, but that is sales tax only.

Shipped by Newegg for China Sellers: IOR, ECI, Treaty

Q: What does a treaty claim require, and when?

Generally a Form 1120-F with Form 8833 disclosing the treaty position. A foreign corporation without a U.S. office generally files by the 15th day of the sixth month after year-end, June 15 for a calendar-year company. A corporation that fails to disclose a treaty position faces a $10,000 penalty per failure.

A Chinese company using Shipped by Newegg (SBN) has two questions to settle first: who is the importer of record, and whether it owes U.S. income tax. Newegg says it will not act as importer of record for any SBN inventory, and inbound shipments must be DDP. Inventory in SBN warehouses in California and Indiana, sold continuously to U.S. customers, is generally a U.S. trade or business. Under the U.S.–China treaty, facilities used solely to store and deliver goods generally aren't a permanent establishment, so business profits can be claimed as not taxable in the U.S., but that claim generally means filing Form 1120-F with Form 8833 on time, and state taxes are outside the treaty.

What SBN is and where the warehouses are

SBN is Newegg's warehousing and fulfillment service. You send inventory in; Newegg picks, packs and ships, and for SBN orders on Newegg.com it also handles returns and customer service. According to Newegg's seller FAQ (checked November 2026), the U.S. warehouses are in Ontario, California (three facilities) and Indianapolis, Indiana (one), with one more in Canada. The system recommends a warehouse, and you can also choose one yourself.

Fees are per unit and per cubic foot. A large standard-size unit of 1 to 2 pounds costs $7.30 to fulfill, plus $0.52 per pound above 2 pounds. Storage is $0.60 per cubic foot per month from January to September and $2.40 from October to December, and inventory held more than 365 days pays $7.00 per cubic foot per month. Professional and Enterprise members get 5% and 8% off SBN fees.

Newegg won't be the importer: how goods enter the U.S.

Newegg's International Inbound Shipment Requirements for SBN are blunt. Newegg will not be responsible for, or collect, any duties, taxes or shipping costs on SBN inbound shipments. Every shipment must move on DDP terms, and anything arriving at a Newegg fulfillment center with collect charges is refused. Newegg will not act as importer of record for any SBN import, regardless of size, value, origin or product.

Without a U.S. company: the guide explains that a foreign seller can import as a non-resident importer, with a licensed customs broker holding the seller's CBP power of attorney making entry. Under CBP rules, a non-resident corporation importing goods needs a resident agent in the state of the port of entry. The seller is responsible for product compliance, filing the entry and paying the duty.

Ultimate consignee: Newegg may appear as ultimate consignee only if the entity name is followed by "in care of SBN," and your broker must get the tax ID needed for clearance from the SBN team before shipping.

Forwarder-paid duty: when a forwarder handles DDP, the forwarder is often the importer. The duty is then in its name, and only the importer can claim an IEEPA tariff refund through CBP's CAPE function after the Supreme Court's February 20, 2026 ruling. Your inventory cost is only as accurate as the entry summaries and duty bills the forwarder gives you.

No returns abroad: SBN inventory can't be returned to an address outside the U.S., only to a U.S. address or picked up. Plan clearance or disposal for slow-moving parts.

Does a Chinese company with goods in SBN owe U.S. income tax?

Start with whether it is engaged in a trade or business in the United States (Internal Revenue Code §864(b)). There is no dollar threshold; what matters is whether the activity is regular, continuous and substantial. Regular retail sales combined with U.S. warehousing and delivery are generally treated as a U.S. business.

Then ask whether the income is effectively connected (ECI). For goods bought for resale, source generally follows where title passes; for goods you manufacture, income is split between production and sales activity. SBN shipments to U.S. customers generally pass title in the U.S., so the U.S.-source business income is generally ECI, taxed under §882 at the 21% federal corporate rate.

Article 5 of the U.S.–China treaty: using facilities solely to store, display or deliver the enterprise's goods, and keeping a stock of goods solely for those purposes, doesn't create a permanent establishment. SBN warehouses belong to Newegg, an independent service provider, not an agent concluding contracts for you. A Chinese company selling in the U.S. only through SBN can therefore claim it has no permanent establishment and its business profits aren't taxable in the U.S. If it also has U.S. employees, an office, or someone who regularly signs contracts in its name, the answer may change.

What to file when you claim the treaty

Form 1120-F: a foreign corporation claiming treaty protection generally still files Form 1120-F. A foreign corporation without a U.S. office generally files by the 15th day of the sixth month after year-end, which is June 15 for a calendar-year company.

Form 8833: under §6114, a treaty position that changes the U.S. tax result is disclosed on Form 8833; a corporation that fails to disclose faces a $10,000 penalty per failure under §6712.

Why timing matters: a foreign corporation keeps its deductions only if it files a timely, accurate 1120-F. If U.S. tax is later found to apply and no return was filed, deductions can be denied. When in doubt, a protective return is an option.

W-8BEN-E or W-8ECI: Newegg asks foreign sellers for a W-8BEN-E. If the income is ECI, the matching IRS form is the W-8ECI. Payments for goods generally aren't FDAP income subject to 30% withholding, but which form you give Newegg should line up with your 1120-F position, and that is worth deciding before onboarding.

State tax: the treaty doesn't reach it

U.S. states aren't bound by the U.S.–China treaty. Inventory in a California warehouse can make you "doing business" in California once property exceeds the Franchise Tax Board's annually adjusted threshold, with a filing requirement and an $800 minimum franchise tax for corporations; Indiana has its own income tax filing rules. P.L. 86-272 protects only sellers whose in-state activity is soliciting orders, and inventory stored in a state generally takes you outside it. Newegg collects sales tax on platform orders, but that covers sales tax only, not income tax.

Example (hypothetical numbers, to show the method)

Company B in Shenzhen sells network cards and adapters on Newegg in 2027, all through SBN, with $800,000 of sales and $96,000 of profit after purchases, duty, referral fees, SBN fees and advertising. It has no U.S. employees or office.

If it claims no permanent establishment under the treaty, it files Form 1120-F with Form 8833 by June 15, 2028, and federal income tax is $0; California and Indiana taxes are considered separately, with at least $800 in California.

If that position fails, for example because someone in the U.S. negotiates with customers for the company, federal corporate tax is $96,000 × 21% = $20,160. A company that filed its 1120-F on time keeps its deductions; one that didn't may lose them. Branch profits tax would also need to be considered.

Decide before the first shipment

A sensible order: choose the importer and broker; decide the U.S. income tax position, either a treaty claim or a U.S. subsidiary; pick W-8BEN-E or W-8ECI; and only then create the SBN inbound shipment. A U.S. subsidiary acting as importer is the other common route: the platform, bank and customs all deal with one U.S. entity, but the subsidiary files Form 1120 + 5472 every year and must buy from the Chinese factory at arm's-length prices.

For Newegg's full requirements, fees, entity choices and tariff layers, see our Newegg guide; for how duty goes into inventory cost, see the Amazon FBA guide. To settle the importer and tax position before the first container leaves, book a free 15-minute call or reach us on WeChat at YCLUSA.