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Author Topic: No need for an ITIN number with fotolia or any other site  (Read 5645 times)

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« on: January 05, 2010, 11:16 »
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I found this on the alamy forum, it is about the Getty-flickr collection.

"The reason that we are different is that Getty Images has invested in structuring our business in a manner that simplifies this for our non U.S. artists. We have applied, and been approved, by the U.S. Internal Revenue Service a certain business status that allows us to provide treaty benefits to non U.S. tax residents without the additional requirement of an ITIN or EIN."

This makes it clear to me that Getty, Shutterstock, and Veer Marketplace must have this arrangement in place with the IRS.  Surely there is no excuse for Fotolia or any other site to insist on us getting an ITIN number now?  It didn't take shutterstock long to sort this out and they didn't withhold any tax from my earnings.  I expect the same from Fotolia, they wont get any new images from me until they have investigated this further and if they still insist on the ITIN, I will have to consider my future with them.


« Reply #1 on: January 05, 2010, 14:16 »
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So this almost sounds like there really isn't any legal reference that we could quote that would kind of force FT to not require ITIN. It is just a special arrangement with IRS and no one knows on what exactly it is based and whether FT does not want to or cannot make it.

« Reply #2 on: January 05, 2010, 14:35 »
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So this almost sounds like there really isn't any legal reference that we could quote that would kind of force FT to not require ITIN. It is just a special arrangement with IRS and no one knows on what exactly it is based and whether FT does not want to or cannot make it.

To me it sounds like FT have to figure out the cost of mailing signed W7 letters to everybody that requires it for an ITIN number versus the cost of doing it without ITIN. If they go with the ITIN then they will have to continuously send signed W7 letters non-stop.  If they figure how to do it without ITIN like SS then they don't have to send letters. I think it is a matter of how much will this cost on the long term and which one of this two options will cost less. One option is time consuming and the other is not. I think history will repeat itself and they will eventually find a way without ITIN. Denis
« Last Edit: January 05, 2010, 14:39 by cybernesco »

« Reply #3 on: January 05, 2010, 15:29 »
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^^ Looks like they are sending the letter as PDF with 'hand written' signature. If that satisfies IRS (and I guess it will), then that is easy to automate and hence cut the costs to almost 0 (long term).

« Reply #4 on: January 05, 2010, 16:25 »
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Having seen the reaction to the ITIN on the shutterstock forums, before they sorted it out, I think this is going to be a huge problem for FT if they don't sort it out quickly.  It looks like there is a significant number of contributors that don't want to spend money and time doing the paperwork for an ITIN.  It pushes them towards exclusivity with istock or just using the sites that don't ask for the ITIN.  I think fotolia have underestimated the amount of money they will lose from this.  Hopefully it will dawn on them and now they know other sites have an agreement with the IRS, there really isn't any excuse they can use.

« Reply #5 on: January 05, 2010, 17:57 »
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^^ Looks like they are sending the letter as PDF with 'hand written' signature. If that satisfies IRS (and I guess it will), then that is easy to automate and hence cut the costs to almost 0 (long term).

I know from personal experience that a printed W7 letter from another well known stock agency got my ITIN application rejected a few months ago. However, I must say that it was not a PDF file therefore it may or may not work, I don't know?  The last time it cost me over $100.00 to have documents certified and shipped only to have the application rejected 6 weeks later because the W7 letter was not original. In addition, the IRS don't return your documents if they are rejected (unless it is an original passport) therefore you have to start all over again if rejected!!!  At that time, with the other agency, while waiting for my ITIN application to be approved, they found a way to do without the ITIN number and be in full compliance with the IRS.  Although my ITIN application was eventually rejected, it was no longer required. At that time I did not care anymore about loosing over $100.00 as I though this ITIN saga was finally behind us. Well today I wish I had the application approved.

I am reluctant regarding spending money towards a non-original W7 letter.  I am not saying this is not gonna work but can you imagine if they had mass rejections how mad this would make Fotolia members. I am still willing to use the pdf file but before sending it I will wait the results of the first ones sent as I am sure we will hear about it. Denis


« Reply #6 on: January 05, 2010, 18:09 »
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.... I think this is going to be a huge problem for FT if they don't sort it out quickly.  It looks like there is a significant number of contributors that don't want to spend money and time doing the paperwork for an ITIN.  It pushes them towards exclusivity with istock or just using the sites that don't ask for the ITIN.  I think fotolia have underestimated the amount of money they will lose from this.  Hopefully it will dawn on them and now they know other sites have an agreement with the IRS, there really isn't any excuse they can use.

... is the right answer.

FT need to get their * together and quickly or I will be past caring and simply go exclusive as soon as I can. What annoys me more than anything is that they appear to be withholding US tax on all sales irrespective on whether not the sale originated from the US. This simply has to be illegal doesn't it?

« Reply #7 on: January 05, 2010, 18:30 »
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.... I think this is going to be a huge problem for FT if they don't sort it out quickly.  It looks like there is a significant number of contributors that don't want to spend money and time doing the paperwork for an ITIN.  It pushes them towards exclusivity with istock or just using the sites that don't ask for the ITIN.  I think fotolia have underestimated the amount of money they will lose from this.  Hopefully it will dawn on them and now they know other sites have an agreement with the IRS, there really isn't any excuse they can use.

... is the right answer.

FT need to get their * together and quickly or I will be past caring and simply go exclusive as soon as I can. What annoys me more than anything is that they appear to be withholding US tax on all sales irrespective on whether not the sale originated from the US. This simply has to be illegal doesn't it?


It certainly is!

« Reply #8 on: January 05, 2010, 18:53 »
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I wonder why nobody hasn't mentioned the EIN route for photographers with acting ascompanies, yet. With SS, that worked like a charm. One phone call to the IRS, and the matter was solved...

See: http://www.irs.gov/businesses/small/article/0,,id=97860,00.html, and for photographers form countries with tax treaties with the US, please note:
Quote
Apply By EIN Toll-Free Telephone Service
Taxpayers can obtain an EIN immediately by calling the Business & Specialty Tax Line at (800) 829-4933. The hours of operation are 7:00 a.m. - 10:00 p.m. local time, Monday through Friday. An assistor takes the information, assigns the EIN, and provides the number to an authorized individual over the telephone. Note: International applicants must call (215) 516-6999 (Not a toll-free number).


« Reply #9 on: January 06, 2010, 03:24 »
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.... I think this is going to be a huge problem for FT if they don't sort it out quickly.  It looks like there is a significant number of contributors that don't want to spend money and time doing the paperwork for an ITIN.  It pushes them towards exclusivity with istock or just using the sites that don't ask for the ITIN.  I think fotolia have underestimated the amount of money they will lose from this.  Hopefully it will dawn on them and now they know other sites have an agreement with the IRS, there really isn't any excuse they can use.

... is the right answer.

FT need to get their * together and quickly or I will be past caring and simply go exclusive as soon as I can. What annoys me more than anything is that they appear to be withholding US tax on all sales irrespective on whether not the sale originated from the US. This simply has to be illegal doesn't it?


It certainly is!

It is not that simple. As far as I know, they are witholding 30% on sales in the US for people with validated submitted form without ITIN and applying 28% income tax on all sales for people without the form. I'm pretty sure they are basing this on something, they may be wrong, yet it is not just a mistake.

Also, to Sharpshots point, doing math for my (it may be statistically irrelevant as the sample is not large enough) sales, the 30% witheld on US sales (which is what is happening to me as I have validated form without ITIN), equals to approx 4 - 5% of the money earned. That's not that much. So it may actually push people towards exclusivity, yet it is more the absurd unprofessionalism with which FT handled this that may push people towards exclusivity so that they don't have to handle stuff with such an agency.

« Reply #10 on: January 06, 2010, 04:06 »
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I wonder why nobody hasn't mentioned the EIN route for photographers with acting ascompanies, yet.
Because EIN has a number of drawbacks; and basically higher responsibility from you towards IRS (and most probably more paperwork in the future).

« Reply #11 on: January 06, 2010, 04:16 »
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I only want to deal with the tax in my own country, the UK.  I don't see why I should need an ITIN or EIN because that is for the IRS in the USA.  It looks like Getty, Corbis and Shutterstock have an agreement with the IRS that allows its contributors to not have an ITIN, what possible reason can any other stock site come up with for not doing the same?  If thousands of microstock contributors makes less than $100-$200 in a year, why should they have to spend all that money on an ITIN number?

« Reply #12 on: January 06, 2010, 05:12 »
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I wonder why nobody hasn't mentioned the EIN route for photographers with acting ascompanies, yet.
Because EIN has a number of drawbacks; and basically higher responsibility from you towards IRS (and most probably more paperwork in the future).

Hi MikLav,

What additional paperwork are you referring to? If the IRS doesn't withhold anything, I'm only responsible for the local taxes, which I already do. Don't see any higher responsibility towards the IRS - I don't owe them anything.

As far as I've managed to uncover, as soon as you file your stock income with your (my) national tax "services" as a business, you'll need to register for an EIN with the IRS to be exempt from withholding taxes. The ITIN (or no-ITIN) only applies to individuals as legal entity.

The only draw back of using an EIN on fotolia, is that it's only valid for one year, after which you'll need to file another W8-BEN form, using the same data if nothing changes in your company.

« Reply #13 on: January 06, 2010, 05:59 »
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with EIN you are also obliged to file a tax return every year.

That's what IRS told me:
"The choice as to whether to use an Employer Identification Number (EIN), or Individual Taxpayer Identification Number (ITIN), is up to you. Whichever number you use would dictate how the payments are made out, when paid. Your concern over establishing a filing requirement if you choose and EIN is valid. If an EIN is assigned, there is normally a filing requirement established. With the tax, if any, being satisfied at source because of the correct amount of withholding, if required, there would be no need to file a return unless you were claiming withholding back, or you had another item of income that required reporting. However, once the number (EIN) has been assigned, an automatic process is set up which would require that you file a return for that EIN number. You would then have to notify the IRS that you did not have a filing requirement for that year, and also remove future filing requirements. If you obtained the ITIN, then the correct amount would be withheld, if any, at source and there would be no need to file a return, unless there was a claim for withholding back or you had additional items of income that required reporting. To summarize, once the W-8BEN is in place, if there is any withholding required it will be at the correct rate. Your tax obligation, if any, would have been satisfied, and you would not need to file. However, the EIN assignment triggers an automatic process, that will entail a notice requesting a return if we do not get one from you for your business."

« Reply #14 on: January 06, 2010, 06:21 »
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with EIN you are also obliged to file a tax return every year.

That's what IRS told me:
"The choice as to whether to use an Employer Identification Number (EIN), or Individual Taxpayer Identification Number (ITIN), is up to you. Whichever number you use would dictate how the payments are made out, when paid. Your concern over establishing a filing requirement if you choose and EIN is valid. If an EIN is assigned, there is normally a filing requirement established. With the tax, if any, being satisfied at source because of the correct amount of withholding, if required, there would be no need to file a return unless you were claiming withholding back, or you had another item of income that required reporting. However, once the number (EIN) has been assigned, an automatic process is set up which would require that you file a return for that EIN number. You would then have to notify the IRS that you did not have a filing requirement for that year, and also remove future filing requirements. If you obtained the ITIN, then the correct amount would be withheld, if any, at source and there would be no need to file a return, unless there was a claim for withholding back or you had additional items of income that required reporting. To summarize, once the W-8BEN is in place, if there is any withholding required it will be at the correct rate. Your tax obligation, if any, would have been satisfied, and you would not need to file. However, the EIN assignment triggers an automatic process, that will entail a notice requesting a return if we do not get one from you for your business."

Interesting bit of new information for me, thanks! I'll look into it. I can imagine such a system being in place for US residents, but overseas foreigners? The W8-BEN form already indicates (question 13, where you can specify the treaty code, I believe), that no tax is withheld, so there should be no further requirement. Guessing, here. I might as well give them another call.

If you can notify the IRS, that you dind not have a filing requirement for that year (which seems plausible for non-US residents), and be able to remove future filing requirements, it shouldn't be much of a hassle.

Any idea what IRS form that'll be?

Microbius

« Reply #15 on: January 06, 2010, 13:49 »
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taglist you may have just saved my bacon! any idea which form we then fill in on Fotolia using the EIN, W-8 BEN, W-8 ECI, W-8 IMY or W-8 EXP ?

« Reply #16 on: January 06, 2010, 14:08 »
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... any idea which form we then fill in on Fotolia using the EIN, W-8 BEN, W-8 ECI, W-8 IMY or W-8 EXP ?

I think the easiest form is the Istock Exclusivity Application.

« Reply #17 on: January 06, 2010, 14:11 »
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taglist you may have just saved my bacon! any idea which form we then fill in on Fotolia using the EIN, W-8 BEN, W-8 ECI, W-8 IMY or W-8 EXP ?

Using my EIN, I filled in the W8-BEN form; just like I did with SS. (Even stronger, I opened up that form again, as it's saved on SS to check which fields I filled in). It got approved on FT, too, and no tax is being withheld. However, I think MikLav's response is reason for caution...


« Reply #18 on: January 06, 2010, 14:16 »
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I'm not a US resident, I'm Italian.
I submitted the W8 without an ITIN: there's no way I'm going to apply for one since to get all my documents validated and sent in the US would be more expensive than the actual withheld taxes. I should get taxed of just the 5% according to the treaty country issue but given that US sales are not the main ones in my portfolio, the ITIN odyssey would not be worth it.
Anyway the way Fotolia is handling with that is really not correct and extremely not professional.

« Reply #19 on: January 06, 2010, 14:29 »
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I think that it is just a matter of time before Fotolia do it without ITIN. The following is a response I got from Daniela, Fotolia UK Director and my response thereafter:

>>>>>>>>>>>>>>>>>>>>>>>>>
I believe that if Fotolia are forced to send us signed letters by mail that it will force them to reconsider the cost of mailing letters to everybody versus doing it without ITIN number. Can you imagine how time consuming it would be if all of a sudden they had to send us signed letters non-stop.
 Denis

>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Yes, Denis, must be sent by mail - PDF is not sufficient :(

But please have a little patience and we will give you all the info you'll need.  Very shortly, I promise.

Daniela

Director, Fotolia United Kingdom

>>>>>>>>>>>>>>>>>>>>>>>>>

This is great news    

Now as you can see doing it without ITIN numbers would be far more efficient and cost effective.

Sharpshot has found the following very important info the other day:

>>>>>>>>>>>

I found this from one of the sites that doesn't ask for an ITIN.

"The reason that we are different is that **** ****** has invested in structuring our business in a manner that simplifies this for our non U.S. artists. We have applied, and been approved, by the U.S. Internal Revenue Service a certain business status that allows us to provide treaty benefits to non U.S. tax residents without the additional requirement of an ITIN or EIN."

So there you are Fotolia, all you have to do is work with the IRS to save thousands of your contributors money and time spent on this.  One site I use had this done in a few weeks and no tax was withheld while they sorted it out.  I expect the same treatment here.

>>>>>>>>>>>>>>


Thank you again for your effort    
http://www.fotolia.com/forum/viewtopic.php?id=24454

Denis
« Last Edit: January 06, 2010, 14:34 by cybernesco »

« Reply #20 on: January 06, 2010, 14:33 »
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You are our saviour ;o)

« Reply #21 on: January 06, 2010, 15:15 »
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I am so relieved that we are finally going to get some concrete answers. I'm so glad Daniela came on the forum and it does look like she will come back to us with some good news about the ITIN being unnecessary. Well, I hope so anyway.

Thanks Denis for keeping everyone here updated on the progress through this long debate. From what I've heard from some of the people on the 'Cafe du Monde' forum at fotolia, a lot of international fotolians do not seem to have access to the 'legal board' (and other forums) as the rest of us do. I don't know why, but they only have access to 'Cafe du Monde'.


 

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