I actually found that form 8833 and completed it based on some extensive reading. What I'm stumped about is that completing that form doesn't change anything about the tax liability. I assumed that completing that form, checking a box, or entering a number somewhere would create an offset on the schedule c net income resulting in a zero tax liability. That doesn't seem to be the case. 

There is a place to enter total income exempted by treaty (line 1 c 1040-NR), but that only offsets lines 1 a and b. 

I'm wondering if since she is exempt based on my interpretation of the treaty article 7, that I just file proforma 1120 and 5472 and skip the 1040-NR with schedule C.

BTW there seems to be differing opinions on whether Amazon sellers are exempt based on an Amazon warehouse not being a "permanent establishment" of their business. I'm agreeing with most opinions that they are exempt.

I was aware of sales tax. I was not aware of any state income tax.