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Author Topic: Will US withholding tax apply to Photos.com sales for istock contributors?  (Read 7526 times)

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« on: May 29, 2009, 03:32 »
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Theres a question about this on the istock forum. I'll be interested in the response.


« Reply #1 on: May 29, 2009, 04:38 »
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I think istock would make sure they pay people through their Canadian finance offices, to get around this.  I can't understand why shutterstock don't move their finances outside the US.  It seems every other big internet company has done that with no problems, so why can't SS?  Google, Facebook, Yahoo!, e-bay,Amazon and many more are located in Ireland, I wonder why :)

« Reply #2 on: May 30, 2009, 10:55 »
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I think istock would make sure they pay people through their Canadian finance offices, to get around this.  I can't understand why shutterstock don't move their finances outside the US.  It seems every other big internet company has done that with no problems, so why can't SS?  Google, Facebook, Yahoo!, e-bay,Amazon and many more are located in Ireland, I wonder why :)

Jon isn't that smart, I feel confident that a significant number of his non US based submitters will fly the coop.

« Reply #3 on: May 30, 2009, 11:29 »
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Jon isn't that smart ...

Huh? When was the last time you built a $50M+ per year business from scratch in under 5 years?

lisafx

« Reply #4 on: May 30, 2009, 12:51 »
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Jon isn't that smart ...

Huh? When was the last time you built a $50M+ per year business from scratch in under 5 years?

Yeah.  Wow.  Totally uncalled for. 

Fact is that Jon has managed to run his business quite successfully, and with a minimum of drama and aggravation for everyone, including buyers and submitters. 

This is the first time in years I can remember a dustup at Shutterstock, and it isn't even their doing, but something externally imposed by the IRS. 

If you ask me it is the IRS (actually congress) that should rethink policies that push successful US businesses offshore. 

digiology

« Reply #5 on: May 30, 2009, 13:14 »
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If you ask me it is the IRS (actually congress) that should rethink policies that push successful US businesses offshore. 

exactly...

« Reply #6 on: May 30, 2009, 13:16 »
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Fact is that Jon has managed to run his business quite successfully, and with a minimum of drama and aggravation for everyone, including buyers and submitters. 

This is the first time in years I can remember a dustup at Shutterstock, and it isn't even their doing, but something externally imposed by the IRS. 

Exactly. If my porfolio is representative of the greater collection then Jon is also paying out about $2M per month to contributors. He certainly deserves their respect if not their gratitude.

« Reply #7 on: May 30, 2009, 19:15 »
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No reply from istock admins on this so far. One British istock exclusive has already commented that he doesn't contribute to Getty because of the tax situation. I'm guessing the same tax situation will apply to Photos.com but perhaps I'm wrong.

« Reply #8 on: May 30, 2009, 23:22 »
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I think istock would make sure they pay people through their Canadian finance offices, to get around this.  I can't understand why shutterstock don't move their finances outside the US.  It seems every other big internet company has done that with no problems, so why can't SS?  Google, Facebook, Yahoo!, e-bay,Amazon and many more are located in Ireland, I wonder why :)

Jon isn't that smart, I feel confident that a significant number of his non US based submitters will fly the coop.

Wow that is bad. How big is your company?   Why should a company be forced to move their finaces.  And don't let the "big Internet" companies fool you. They have done nothing in your interests. Certainly not at eBay.

« Reply #9 on: May 31, 2009, 13:26 »
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Jon isn't that smart ...

Huh? When was the last time you built a $50M+ per year business from scratch in under 5 years?

Yeah.  Wow.  Totally uncalled for. 

Fact is that Jon has managed to run his business quite successfully, and with a minimum of drama and aggravation for everyone, including buyers and submitters. 

This is the first time in years I can remember a dustup at Shutterstock, and it isn't even their doing, but something externally imposed by the IRS. 

If you ask me it is the IRS (actually congress) that should rethink policies that push successful US businesses offshore. 

This is not the fault of the IRS, they are just doing their job, which is collecting tax. Other agencies know about it, so for the life of me I don't understand why SS didn't for all this time. 

This is an SS cock-up pure and simple, their tax lawyer or tax accountant should have let them know when the business was started. Jon/SS haven't been very smart, they should have known about this situation a long time ago which obviously they didn't, so in theory SS has been paying submitters illegially which has now jumped up and bit them and us on the arse.

There are a significant number of Eastern European contributors who will be hammered by the 30% tax, if I was in this boat I would say goodbye SS, now if SS were smart they would open an overseas office and make the effort to keep these photographers happy. Opening this office could have happened quite easily with a minimum of fuss, SS has made a hash of this. Plus Jon's outbursts on the SS forum also haven't helped matters either.

« Reply #10 on: May 31, 2009, 14:19 »
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Jon isn't that smart ...

Huh? When was the last time you built a $50M+ per year business from scratch in under 5 years?

Yeah.  Wow.  Totally uncalled for. 

Fact is that Jon has managed to run his business quite successfully, and with a minimum of drama and aggravation for everyone, including buyers and submitters. 

This is the first time in years I can remember a dustup at Shutterstock, and it isn't even their doing, but something externally imposed by the IRS. 

If you ask me it is the IRS (actually congress) that should rethink policies that push successful US businesses offshore. 

This is not the fault of the IRS, they are just doing their job, which is collecting tax. Other agencies know about it, so for the life of me I don't understand why SS didn't for all this time. 

This is an SS cock-up pure and simple, their tax lawyer or tax accountant should have let them know when the business was started. Jon/SS haven't been very smart, they should have known about this situation a long time ago which obviously they didn't, so in theory SS has been paying submitters illegially which has now jumped up and bit them and us on the arse.

There are a significant number of Eastern European contributors who will be hammered by the 30% tax, if I was in this boat I would say goodbye SS, now if SS were smart they would open an overseas office and make the effort to keep these photographers happy. Opening this office could have happened quite easily with a minimum of fuss, SS has made a hash of this. Plus Jon's outbursts on the SS forum also haven't helped matters either.

So what now - it's Jons fault that the IRS imposes a tax on non-resident aliens???  I think not.  Jon lives in the US.  Jon is a US citzen.  Jon started, owns and operates his business in the US.  Do you really think that even if his tax accountant told him about the IRS non-resident tax prior to starting the business, he would just have up and moved his family and business to a completely different country???  Move away from his friends and family??  Seriously - think about it.  There is nothing wrong with Jon running and operating a business in the country in which he lives.  Opening an 'office' in another country does him no good, but he would still be incorporated and having the headquarters in the US - meaning there would still be this tax problem. 

I feel badly for the contributors that are going to be hit with this 30% tax...but again it is NOT SS who is demanding this money - it is the IRS.

« Reply #11 on: May 31, 2009, 14:34 »
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I never said it's Jons fault, same as I never said it's the IRS's fault, I believe that Jon and SS could have managed this much better than they have, in fact they have really cocked the whole thing up, firstly they supplied the wrong information, then Jon gets all crappy on the boards, now we finally know the facts, it's still going to double tax a whole heap of members, had SS been smart they would have set up an offshore company to deal with people who are going to be affected, but no they weren't that clever, now they run the risk of loosing a lot of images and sales.

Like many have said it's not a difficult problem for them to solve and they should have seen it coming.

« Reply #12 on: May 31, 2009, 16:18 »
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Jon isn't that smart ...

Huh? When was the last time you built a $50M+ per year business from scratch in under 5 years?

I dont like the IRS policy (who does?), I think it could have been handled better by SS with more time and information etc. (but then many people aren't listening anyway, how many times do people in forum have to say authorised by public notary), however I never before had a problem with the way I have been treated at SS. (I do think an european office would have fixed things quite easily)

re people leaving - how much difference will it make? the petition stated somewhere around 400 people and 150000-300000 images, the site is gaining 80000 images a week, even if that drops to 70000 a week, is it a big deal for SS?, it is still 3.5 million images a year? unfortunately pulling images / accounts doesnt achieve a lot.
« Last Edit: May 31, 2009, 16:28 by Phil »

« Reply #13 on: May 31, 2009, 16:38 »
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If SS becomes significantly less profitable some people might reconsider going exclusive at istock.

« Reply #14 on: May 31, 2009, 17:24 »
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um, I think we are a bit off topic here.  This is a thread about the IRS and istock.  Please put your shutterstock comments in this thread
http://www.microstockgroup.com/shutterstock-com/irs-withholding-taxes-for-non-u-s-submitters

« Reply #15 on: June 02, 2009, 04:50 »
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istock admins have confirmed that all payments for Photos.com come via istock and won't be subject to withholding tax.

Milinz

« Reply #16 on: June 02, 2009, 06:03 »
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Well, I am usually critic of iStock policy.

But, now I must say that this is something they did on smart way!

Congrats iStock!

« Reply #17 on: June 02, 2009, 08:06 »
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istock admins have confirmed that all payments for Photos.com come via istock and won't be subject to withholding tax.

I don't think that's relevant.  If what triggers this tax is a US company paying royalties to foreign contributors, than if photos.com is a US company owned by a US company, I don't see the difference.  Shunting the payments through iStock shouldn't change anything.

Milinz

« Reply #18 on: June 02, 2009, 08:10 »
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istock admins have confirmed that all payments for Photos.com come via istock and won't be subject to withholding tax.

I don't think that's relevant.  If what triggers this tax is a US company paying royalties to foreign contributors, than if photos.com is a US company owned by a US company, I don't see the difference.  Shunting the payments through iStock shouldn't change anything.

Oooo... It does makes the difference - it is doing cooperation under business terms between Canadian and US companies... That really don't have nothing with resources or ways how Canadian company gets its content! WAAAY LEGAL and that is why OFFSHORE is great solution to Leagaly AVOID paying unnecessary taxes!

alias

« Reply #19 on: June 02, 2009, 09:25 »
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istock admins have confirmed that all payments for Photos.com come via istock and won't be subject to withholding tax.

I don't think that's relevant.  If what triggers this tax is a US company paying royalties to foreign contributors, than if photos.com is a US company owned by a US company, I don't see the difference.  Shunting the payments through iStock shouldn't change anything.

guess here = photos.com is likely to be selling content on behalf of IS (sub licensed for resale). Not on behalf of the IS photographers :)

Milinz

« Reply #20 on: June 02, 2009, 10:16 »
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Main solvable problem when you need to avoid some tax is not what is done - it is how it is done.
So, by simple changing some dependances you may turn single foreign contributors into some foreign photobank and problems solved!

« Reply #21 on: June 02, 2009, 18:54 »
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It is becoming increasing clear that people will believe what they want to believe.  However if you want to run your business from an informed perspective, it would take 30 seconds to read Article 12 of Canada's Tax Treaty.

« Reply #22 on: June 02, 2009, 20:27 »
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istock admins have confirmed that all payments for Photos.com come via istock and won't be subject to withholding tax.

I don't think that's relevant.  If what triggers this tax is a US company paying royalties to foreign contributors, than if photos.com is a US company owned by a US company, I don't see the difference.  Shunting the payments through iStock shouldn't change anything.

The difference I think is photos.com will pay iStock and not contributors. So as long as iStock has their paperwork in order with the IRS, I don't see why Photos.com would withold tax on them.

« Reply #23 on: June 02, 2009, 21:14 »
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The difference I think is photos.com will pay iStock and not contributors. So as long as iStock has their paperwork in order with the IRS, I don't see why Photos.com would withold tax on them.

Funny system, all this...

« Reply #24 on: June 03, 2009, 00:58 »
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The difference I think is photos.com will pay iStock and not contributors. So as long as iStock has their paperwork in order with the IRS, I don't see why Photos.com would withold tax on them.

Funny system, all this...

Well, not so funny at all. IRS withholding tax is a taxation on US people (all others are not the goal of this tax and they can avoid it by sending in those forms). But in this case, I am not a US citizen paid by a Canadian agency, so I wouldn't see why I should pay income tax on that.
« Last Edit: June 03, 2009, 01:01 by MichaelJay »

michealo

« Reply #25 on: June 03, 2009, 11:37 »
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I think istock would make sure they pay people through their Canadian finance offices, to get around this.  I can't understand why shutterstock don't move their finances outside the US.  It seems every other big internet company has done that with no problems, so why can't SS?  Google, Facebook, Yahoo!, e-bay,Amazon and many more are located in Ireland, I wonder why :)

I suspect the 12.5% corporation tax has a large part to play as do the tax treaties with US, EU and a lot of other countries.
But the English speaking highly qualified workforce plays no small part either.
As do labour laws, productivity levels, etc


 

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