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Author Topic: Fotolia and Witholding Taxes!  (Read 48720 times)

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RT


« Reply #25 on: November 26, 2009, 05:46 »
0
The problem isn't submitting the form, they have asked for an ITIN number.  

I have an EIN number so it doesn't really effect me however I did find this paragraph during the process that might answer your question:

"Please note - a W-8BEN form can be submitted without an ITIN number. An ITIN enables the contributor to claim treaty benefits to reduce or eliminate withholding on U.S. source income. An ITIN is not required for income outside of the U.S.."





« Reply #26 on: November 26, 2009, 06:31 »
0
Leaf,

Would it be possible to create a specific tread were we are kept on date on announcements concerning the Fotolia tax thingie.?.
I ask because I and undoubtedly other members are banned from their forums and are kept in the dark concerning announcements.

Patrick H.

« Reply #27 on: November 26, 2009, 06:37 »
0
The problem isn't submitting the form, they have asked for an ITIN number.  

I have an EIN number so it doesn't really effect me however I did find this paragraph during the process that might answer your question:

"Please note - a W-8BEN form can be submitted without an ITIN number. An ITIN enables the contributor to claim treaty benefits to reduce or eliminate withholding on U.S. source income. An ITIN is not required for income outside of the U.S.."




The way it is worded, I presume they will withhold 30% of my income from US sales unless I supply them with an ITIN number.  Is that wrong?  It might not be a lot of money but it could cause a PITA applying for the ITIN or claiming tax relief on my tax return.  I much prefer the way veer and SS have done it without requiring an ITIN number.

« Reply #28 on: November 26, 2009, 07:10 »
0
The way it is worded, I presume they will withhold 30% of my income from US sales unless I supply them with an ITIN number.  Is that wrong?  It might not be a lot of money but it could cause a PITA applying for the ITIN or claiming tax relief on my tax return.  I much prefer the way veer and SS have done it without requiring an ITIN number.


Despite Fotolia's instructions, I think it's unlikely an ITIN or EIN is needed for Fotolia, and not for Shutterstock or Veer. Initially, SS also required individuals to register with the IRS to obtain an ITIN. From what I've understood, an ITIN will make the W8-BEN form valid for an indefinite time, at least until your name, country of residence or address, etc, changes. Fotolia doesn't make the rules, the IRS does. And if the IRS doesn't require a ITIN (or EIN) for SS or Veer, the IRS doesn't require one for Fotolia, either, as the nature of US generated income is identical. To me, it looks like Fotolia is trying to stay on the safe side.

If I've understood the instructions from the IRS manual (link) correctly, photographers are exempted (or at least reduced tax rates) from taxes for income without an ITIN (see page 5, top left column, last bullet) , generated through sales in the US if:
- The income falls under "Royalties"
- The country of residence of the photographer has a tax treaty with the US

Without an ITIN, the W8-BEN form is only valid for a limitied time - not completely sure about this, tho.

I filled in the form without ITIN, and it went through. (Still pending). I did notice that, once submitted, you can always file another form. I just hope I'm not wrong ;)

« Reply #29 on: November 26, 2009, 07:44 »
0
That sounds right Taglist.  If fotolia has a different interpretation of the documents there could be a chance that they without tax for submitters without an IT1N or EIN .. although I would think this is highly unlikely, but it seems different agencies have different opinions on this.  I once applied to an agency who required me to have an EIN or else they would withhold 30% tax.  I had an EIN from this occasion so I submitted this to Fotolia to be on the same side.  Getting an EIN number is very quick and can be done over the phone (for those with a sole proprietorship) Anyhow - once with another company I was given a lot of good information.  I will post that here.

Quote
The W-8BEN is not considered valid until box 6 of Part 1 on this form is completed.  This is not optional, but required by the U.S. Government.  The W-8BEN form allows us to recognize the tax treaties between the U.S. and other countries, so no tax or little tax will have to be pulled.  However, without this form we are required (by U.S. law) to pull a 30% tax on all royalties you earn.

 If you would rather not have this 30% tax pulled then you will need to acquire an ITIN, EIN, or SSN number to complete box 6 of Part 1 on the W-8BEN form.  The best thing is to first apply for an EIN number by calling the following U.S. IRS number 215-516-6999 or applying on-line at
http://www.irs.gov/businesses/small/article/0,,id=102767,00.html
If you qualify, the IRS will give you an EIN right over the phone and then you only need to supply us with the EIN number filled into your W-8BEN.

If you do not qualify for an EIN, you will need to complete the attached W-7 form to acquire an ITIN number.  The W-7 form should be mailed to the IRS department directly with all required documentation and it may take several months for a response.  If you need to complete the W-7 form, please let me know as there is some documentation that I need to provide you for this application.

Following are some links to the IRS website with further information on this subject.

1) W-8BEN Form Certificate of Foreign Status http://www.irs.gov/pub/irs-pdf/fw8ben.pdf

 2) W-7 Form ITIN Application
http://www.irs.gov/pub/irs-pdf/fw7.pdf

 3) Form 8833 Treaty Based Disclosure
http://www.irs.gov/pub/irs-pdf/f8833.pdf

4) Publication 515 Tax Treaty Withholding Rates http://www.irs.gov/pub/irs-pdf/p515.pdf
Column 12 - Copyright Royalties - Other

« Reply #30 on: November 26, 2009, 07:44 »
0
Leaf,

Would it be possible to create a specific tread were we are kept on date on announcements concerning the Fotolia tax thingie.?.
I ask because I and undoubtedly other members are banned from their forums and are kept in the dark concerning announcements.

Patrick H.

Isn't that what this thread is doing?  Or how would you like it different?

« Reply #31 on: November 26, 2009, 07:50 »
0
Leaf,

Would it be possible to create a specific tread were we are kept on date on announcements concerning the Fotolia tax thingie.?.
I ask because I and undoubtedly other members are banned from their forums and are kept in the dark concerning announcements.

Patrick H.

Isn't that what this thread is doing?  Or how would you like it different?

The announcements so i can read them.

Patrick H.

« Reply #32 on: November 26, 2009, 08:13 »
0
Leaf,

Would it be possible to create a specific tread were we are kept on date on announcements concerning the Fotolia tax thingie.?.
I ask because I and undoubtedly other members are banned from their forums and are kept in the dark concerning announcements.

Patrick H.

Isn't that what this thread is doing?  Or how would you like it different?

The announcements so i can read them.

Patrick H.

I'll make sure to post any announcement.

« Reply #33 on: November 26, 2009, 08:25 »
0
The people at Fotolia, those sneaky *insult removed*! :(
They really need to take a lecture on communication or something.

I filled out W-8BEN, let's see if it works....

« Reply #34 on: November 26, 2009, 09:06 »
0

I filled in the form without ITIN, and it went through. (Still pending).

It doesn't matter if it goes through or anything. The instructions they provide say that the form can be submitted without an ITIN as well.

But if it is submitted without the ITIN then %30 of your US income will be withheld anyway.


« Reply #35 on: November 26, 2009, 09:09 »
0
Leaf,

Would it be possible to create a specific tread were we are kept on date on announcements concerning the Fotolia tax thingie.?.
I ask because I and undoubtedly other members are banned from their forums and are kept in the dark concerning announcements.

Patrick H.

There is no announcement anyway. So don't worry. This thread is the only announcement. It makes me sick that I or someone else have to discover things like this. They just screw you quietly so you don't realize you are screwed.

That's how they operate!

« Reply #36 on: November 26, 2009, 10:12 »
0
Hey hey for me it's exactly like on Shutterstock.

There are countries THAT HAVE TAX TREATIES WITH THE USA. Residents of these contries will lose on avarage 10% of their US income.
There are also contries THAT HAVE NOT TAX TREATIES WITH THE USA. Residents of these contries will lose 30% of their US income.

You do not need ITIN for neither option.

Michal

« Reply #37 on: November 26, 2009, 11:15 »
0

I filled in the form without ITIN, and it went through. (Still pending).

It doesn't matter if it goes through or anything. The instructions they provide say that the form can be submitted without an ITIN as well.

But if it is submitted without the ITIN then %30 of your US income will be withheld anyway.



Right. And in order to obtain an ITIN, you're required to submit all sorts of documents which need to be signed and notarized. Amongst others, a signed letter from Fotolia, and not some print out of a web page or email. We've been through this with Shutterstock, only to find out later, that an ITIN isn't necessary for individuals to take full advantages of existing tax treaties.

As Leaf suggests: If you want to play it safe, the EIN route is much easier, and much less of a hassle. IMHO, this'll end just like the Shutterstock epistle. A lot of commotion about very little.

« Reply #38 on: November 26, 2009, 12:05 »
0
i am from bosnia, no tretie with USA.

w8ben



when I try to fill data, there is error: Invalid witholding rate value.


I dont have anything to fill into part III; but when I leave blank, error occurs.


??? any ideas?
« Last Edit: November 26, 2009, 12:13 by Peter »

« Reply #39 on: November 26, 2009, 13:36 »
0
@Peter:

Same here ... I'm from a country with tax treaties ... strange  ???

« Reply #40 on: November 26, 2009, 16:19 »
0
But if it is submitted without the ITIN then %30 of your US income will be withheld anyway.

If this is the case, then there's not much point in even going to the trouble of filling out the form is there? (I'm based in the UK)

I don't understand how Shutterstock are happy without the ITIN, but Fotolia require it?

There is no announcement anyway. So don't worry. This thread is the only announcement. It makes me sick that I or someone else have to discover things like this. They just screw you quietly so you don't realize you are screwed.

That's how they operate!

I agree, they've handled it pretty poorly. What is it about sites that find it so hard to communicate with contributors? I only happened to find out about it thanks to this thread.

« Reply #41 on: November 27, 2009, 03:28 »
0
i am from bosnia, no tretie with USA.

w8ben



when I try to fill data, there is error: Invalid witholding rate value.


I dont have anything to fill into part III; but when I leave blank, error occurs.


??? any ideas?

Peter, I am from Croatia...

I filled exactly like on SS, then I saw warning on the top of page that Croatia is not tax threaty ...
I submit anyway and now is pending...

« Reply #42 on: November 27, 2009, 07:55 »
0
I sent you private message, borg.

« Reply #43 on: November 27, 2009, 08:11 »
0
You have an answer!  ;)

« Reply #44 on: December 01, 2009, 10:58 »
0
I just got the following message from Fotolia:

-----
Dear Contributor,

We are happy to inform you that your U.S. IRS Withholding tax form has been validated. Thank you for providing the appropriate tax information. By complying with the U.S. IRS tax law and submitting the tax form, you are not subject to automatic tax withholding at the appropriate rate. Rather, withholding tax, if applicable, may be at a reduced or zero withholding rate.

Feel free to contact us with any questions.

Best Regards,

Fotolia Team
-----

While I'm happy that my tax form has been accepted (without either a ITIN or EIN), it doesn't say which rate - if any - will be applied  ???

« Reply #45 on: December 01, 2009, 12:09 »
0
I received same messages...

« Reply #46 on: December 02, 2009, 08:42 »
0
me 2

« Reply #47 on: December 02, 2009, 10:41 »
0
they (finally) sent a newsletter on this:

Quote
Special Announcement - Withholding Tax Forms and Information

Dear Contributors,

Selling stock images is an economic activity and, as a Fotolia Contributor, income derived from sales in the U.S. may be subject to U.S. IRS (Internal Revenue Service) Withholding Tax. It is important Fotolia, and our contributors, comply with tax law.

While Fotolia cannot give tax or legal advice, our objective is to assist you in determining which form may be completed to comply with U.S. Withholding Tax law. Forms are now available in the Tax Center to assist contributors in determining their tax compliance.

Please review the information. We encourage you to contact your tax or legal advisor for assistance.

WHAT IS THE PROCEDURE?

First - Verify all information in your account profile is current and accurate. If not, please update.

Second - Determine the applicable form to complete and submit to Fotolia. Certain information will be confirmed with the U.S. IRS (Internal Revenue Service).

FORMS

Compliance is based on many factors and the following information may assist you in this process.

In some cases, a contributor will benefit from reduced or eliminated withholding by obtaining a U.S. TIN (Taxpayer Identification Number). Forms SS-4 and W-7 are available in our Tax Center to assist. Please consult with your advisors to determine the proper form to complete.

The SS-4 and W-7 forms must be submitted directly to the IRS, not Fotolia.

Please keep in mind - a contributor who does not submit to Fotolia an IRS Withholding Tax Form - all income will be subject to tax withholding at the applicable tax rate.

WHICH FORM DO I SUBMIT?

We listed two general categories to assist you in identifying the proper form. These guidelines may help you determine which form is applicable to your situation. In all cases, we recommend you contact your tax or legal advisor.

SUBMISSION GUIDELINES

If you are an individual

- You are a US citizen or a resident alien > Form W-9 would typically be appropriate.
- You are a resident of a country that has a tax treaty with the USA > Form W-8BEN would typically be appropriate.
- You are a resident of a country that does not have a tax treaty with the USA > Form W-8BEN would typically be appropriate.

Foreign residents note - in some cases Form W-8ECI or Form W-8IMY may be appropriate.

If you are not an individual

- Your entity is organized under US law > Form W-9 would typically be appropriate.
- Your entity is not organized under US law > Form W-8BEN, W-8ECI, W-8IMY or W-8EXP may be appropriate, depending on the situation. Please ask your tax advisor to determine which form is applicable to your situation.

For more information about the forms, please visit the Tax Center .
Once you determined the appropriate form, you can submit Forms W-9, W-8BEN, W-8ECI, W-8IMY and W-8EXP online.


WITHHOLDING RATES

Submitted Withholding Tax forms will be validated and the appropriate tax treatment applied to your income. The following general rules apply:

- U.S. taxpayers typically are not subject to withholding on their Fotolia income.
- Foreign residents, with the appropriate validated form, are not subject to withholding tax on sales outside the U.S.. Additionally, an ITIN (Individual Taxpayer Identification Number) is not required.
- Foreign residents in a Tax Treaty Country with the U.S., with the appropriate validated form, including ITIN, benefit from zero or reduced withholding.
- Foreign residents in a non-Tax Treaty Country with the U.S., with the appropriate validated form, will be subject to 30% withholding tax on U.S, source income. An ITIN is not required and withholding tax will not apply to sales outside the U.S.

Regardless of residency or type - no Form will automatically result in tax withholding on all Fotolia income.

COUNTRIES WITH TAX TREATIES

Countries with U.S. Tax Treaties and their respective rates are available in the Tax Center .

HOW MUCH TIME DO I HAVE TO COMPLY?

We encourage you to complete this procedure as soon as possible. However, in order to allow enough time to our contributors, withholding will be activated on January 1, 2010. After this date, withholding will be applicable on all payments.

For more information, please visit the Tax Center.



« Reply #48 on: December 02, 2009, 11:22 »
0
Well: I have recieved the email today, and reding the info in the tax centre i reched the same conclusion that all of you, They seem to ask the ITIN from us, or else 30% withold from our US sales.
I will waith some days hoping finally they realise it is not neccesary as "taglist" allready show us here some post behind.

« Reply #49 on: December 02, 2009, 11:36 »
0
I don't understand why they didn't send the email out before putting the tax center on the site.  Was waiting a week a good idea?  All it has done is cause confusion and wasted our time.  I either haven't received the email or I deleted it thinking it was nothing important. 

I don't expect them to sort this out like SS did, hopefully they can surprise me.


 

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