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Author Topic: Envato want to be a reseller and makes the contributor to the seller!?  (Read 27822 times)

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« Reply #75 on: February 22, 2015, 16:27 »
0
But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.

I don't get 1099'd by Envanto.

Not up to now, but read their license change that JoAnn posted.  They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.


« Reply #76 on: February 22, 2015, 18:13 »
+3
But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.

I don't get 1099'd by Envanto.

Not up to now, but read their license change that JoAnn posted.  They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.

Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net.  I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business.  So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.

« Reply #77 on: February 22, 2015, 18:33 »
+3
I got a reply back to my request to close my account and was told that my message had been forwarded "to the necessary staff for consideration." And maybe I'm reading too much into it but to me, "for consideration" might suggest that they could be reconsidering the implications of this new policy, particularly if contributors are requesting to close their accounts because of it.

So anyone considering closing their account, I'd suggest contacting Envato to let them know that you're even thinking about it. Maybe if enough people express an interest in parting ways with them, they might fix this mess.

I got back something similar that they were "escalating" and would be in touch shortly.

I'm not fussed either way about the outcome, but I do think it's worthwhile to take the opportunities we can (like with DPC) to make it clear to the agencies that poor treatment of contributors will have consequences.

I can't imagine they can back away from the whole scheme, but I can perhaps imagine that they'll treat PhotoDune differently - because they're acting just like an agency, setting prices and reviewing contributions for inclusion or not.

I don't know about the EU contributors, but I'd be happy if they just issued the 1099 to me for the money they actually paid me, regardless of the convoluted invoice scheme they've cooked up. So I guess that's another possible way out of the conundrum for a subset of contributors.

« Reply #78 on: February 22, 2015, 18:48 »
+3
What the h... are you doing Envato? This type of invoice youve sent to the buyers are illegal where I live. But its not your problem right? You just wrote my name on the invoice and everything is OK for you? So thats the wrong way!

BTW: Why is my full name on the Invoice but only the first letter from the buyer?

1) if it is illegal in your country, and there is a tax treaty, why not then submit the actual papertrail to IRS of your country, then let IRS go to Envato's IRS for audit???
2) if enough of us do that, Envato will be audited in the country they report their earnings.
Anything else, like Mantis suggest would only make it more complicated for the contributor.
It's best to shift the onus of reporting to Envato.
If they are indeed doing something not kosher in taxation, Envato won't last very long playing this scheme, no matter which country they are responsible to report their earnings.

« Reply #79 on: February 22, 2015, 19:01 »
+6
But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.

I don't get 1099'd by Envanto.

Not up to now, but read their license change that JoAnn posted.  They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.

Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net.  I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business.  So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.

Yes, but you're paying taxes on $3300, and expensing $2300 is not the same as paying taxes on $1000. I think that's the catch in this whole system.

« Reply #80 on: February 22, 2015, 19:04 »
0
But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.

I don't get 1099'd by Envanto.

Not up to now, but read their license change that JoAnn posted.  They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.

Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net.  I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business.  So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.

Yes, but you're paying taxes on $3300, and expensing $2300 is not the same as paying taxes on $1000. I think that's the catch in this whole system.

Genuine curiosity: How is it not? It is here in Europe.

« Reply #81 on: February 22, 2015, 19:08 »
0
But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.

I don't get 1099'd by Envanto.

Not up to now, but read their license change that JoAnn posted.  They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.

Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net.  I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business.  So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.

Yes, but you're paying taxes on $3300, and expensing $2300 is not the same as paying taxes on $1000. I think that's the catch in this whole system.

Genuine curiosity: How is it not? It is here in Europe.

Maybe I'm totally wrong - it also may depend on whether you get income as an individual, LLC or other. I haven't really seen a great explanation of how this works.

« Reply #82 on: February 22, 2015, 19:16 »
0
But their 1099 wont match your accounts then? Just asking as I am not US taxed, I dont know how it works in the US.

I don't get 1099'd by Envanto.

Not up to now, but read their license change that JoAnn posted.  They are planning on 1099ing US controbs for 2015 and reporting your gross income, not the net they actually paid you.

Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net.  I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business.  So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.

Yes, but you're paying taxes on $3300, and expensing $2300 is not the same as paying taxes on $1000. I think that's the catch in this whole system.

I itemize and what I pay taxes on is my net income after expenses. So in the case above I would pay taxes on $1000. So I believe it's a one-to-one issue. I'm meeting with my CPA on Friday (dreaded taxes) and will confirm with him.

« Reply #83 on: February 22, 2015, 20:17 »
+5
Ok understood, but for us in the US I will just report their cut as an expense, keeping my total income from Envanto what I actually net.  I am not a tax attorney but it seems pretty simple to write off their cut as a cost of doing business.  So if I make $1000 in a year and they report $3300 income, I am going to write off $2300 as an expense. Maybe I'm oversimplifying it.

You're not oversimplifying it, but in my case, it makes a whole lot of things complex.

I do stock part time. Given that all the gear and my home office are used for other things as well, I don't write any of it off (keeping track of the proportions, days and hours is just not something I want to do). All the travel we do is family travel, and again, not specifically for stock, and I don't deduct any of it. I don't pay models or rent venues; I have a bucket load of computers for other purposes too.

I probably pay a bit more tax than I owe, but I report what the agencies pay me, as a sole proprietor. I don't want to have to start keeping track of all the expenses to do the books the way  you would with a "real" business, but if Envato starts reporting more than they actually pay me, I'm not up for overpaying even more by paying tax on that, and I don't want to deal with the recordkeeping to start a full set of books.

Avoiding the hassle of an audit (I'm not worried about owing money, but the time spent digging up all the paperwork and organizing it) is a priority; I don't see how I can handle claiming expenses from just this one agency without risking raising some audit red flag. For a few hundred a year it's just not worth it to me.

YMMV

« Reply #84 on: February 22, 2015, 21:14 »
0
Avoiding the hassle of an audit (I'm not worried about owing money, but the time spent digging up all the paperwork and organizing it) is a priority; I don't see how I can handle claiming expenses from just this one agency without risking raising some audit red flag. For a few hundred a year it's just not worth it to me.

YMMV

but that's exactly what envato is counting on , you don't want an audit so you won't report envato 's illegality of giving you the actual earning . a tax audit to not to penalize you , it is to penalize those who cheat.

« Reply #85 on: February 22, 2015, 23:19 »
+1
For a few hundred a year it's just not worth it to me.

YMMV

Your situation and mine are almost identical, Jo Ann. I also write and earn money from books. Stock is just one thing I do, and Envato is a tiny portion of that. Just not worth the bother at all.

For others, it may be worth the bother. We all have to make the right call for ourselves, as we did with DPC, the Google deal, the FB deal, the incredible shrinking royalties, and all the other cr*p that's handed down from the agencies on high.


« Reply #87 on: February 23, 2015, 04:15 »
+13
Hey guys,

I understand it's been pretty confusing with the recent changes to the EU Law.  We've answered some of these questions on our forums, like:

Q: The invoices arent valid for VAT.
A: Youre correct, and we have a second VAT rollout that is coming right after this one. (Click for full answer)



Q: Does Envato report the VAT in the authors name?
A: No, VAT will be collected and remitted under Envatos MOSS registration.
 
Please check out the forum threads like the New Invoices and Statements and Envato Market the platform for more extensive information.  If you do have further questions, please contact [email protected] as this is actively monitored and will be responded to.

Cheers, and thanks for sharing your concerns.

David



David,
you are not answering the open questions.
I would like to read an official statement about why you are doing all these changes.
I have not found a single explanation of why this new setup is beneficial for anyone.

And once more: Who did allow you to give out personal information to third parties (buyers) without first getting our consent - and in direct conflict with your privacy policy?

I am still waiting for an answer.

« Reply #88 on: February 23, 2015, 04:21 »
0
Hey guys,

I understand it's been pretty confusing with the recent changes to the EU Law.  We've answered some of these questions on our forums, like:

Q: The invoices arent valid for VAT.
A: Youre correct, and we have a second VAT rollout that is coming right after this one. (Click for full answer)



Q: Does Envato report the VAT in the authors name?
A: No, VAT will be collected and remitted under Envatos MOSS registration.
 
Please check out the forum threads like the New Invoices and Statements and Envato Market the platform for more extensive information.  If you do have further questions, please contact [email protected] as this is actively monitored and will be responded to.

Cheers, and thanks for sharing your concerns.

David



David,
you are not answering the open questions.
I would like to read an official statement about why you are doing all these changes.
I have not found a single explanation of why this new setup is beneficial for anyone.

And once more: Who did allow you to give out personal information to third parties (buyers) without first getting our consent - and in direct conflict with your privacy policy?

I am still waiting for an answer.


I also wait!

« Reply #89 on: February 23, 2015, 05:07 »
+7
The only question that needs to be answered is will Envato go back to being an agency, or I have no option but to leave.  I will send an email now.

« Reply #90 on: February 23, 2015, 05:36 »
+1

Q: Does Envato report the VAT in the authors name?
A: No, VAT will be collected and remitted under Envatos MOSS registration.
 




@David/Envato another question:

Envato pays only in its own name VAT.
Then I do not have to pay (as Eu-contributor) again VAT in my own name (for EU-buyers) on the whole income?
« Last Edit: February 23, 2015, 05:46 by R2D2 »

« Reply #91 on: February 23, 2015, 09:19 »
+3
@David/Envato another question:
Envato pays only in its own name VAT.
Then I do not have to pay (as Eu-contributor) again VAT in my own name (for EU-buyers) on the whole income?

This is the absurd bit. If we are the sellers, as Envato claims, we should collect and pay the VAT in our name. There's no way I can register the full price that the buyer pays to Envato as if it was me setting the price and arranging the transaction, and then deduct VAT and the fee to Envato. If I did, the tax authorities would expect me to pay the VAT.

So legally it seems to me that nothing has changed, really. Envato are still the sellers, and our "customer" is till Envato. Which means that I can flush the invoice down the toilet and consider my income at Envato as export to Australia.

« Reply #92 on: February 24, 2015, 11:17 »
+10
An update on my exchanges with Envato support.

1. The escalation (support in the UK) was only to ask "...if you've raised your specific concerns with our Finance Team? You can reach them directly via: [email protected]" I replied that I hadn't because I assumed they had no ability to change what Envato is doing, only to try and explain why I should change my accounting at tax reporting to fit their new scheme.

2. Even on account closing, they don't pay out your balance unless it's over $50, so I'll watch my balance and open a support ticket at that point and they'll close my account for me.

« Reply #93 on: February 24, 2015, 12:48 »
0
I sent my email to [email protected] yesterday and have only had an automated response so far.  Hopefully they are working on their announcement that they have screwed this up and will go back to being an agent :)  I think that's their only option, if they like making money.

« Reply #94 on: February 24, 2015, 13:53 »
+3
Likewise, have emailed PD about clarification and also enquired about account closing.

Last thing one needs is audit and tax problems on the pennies made so unnecessary  ???

« Reply #95 on: February 24, 2015, 14:08 »
+7
I'd suggest everyone speak to their own tax professional before making any decisions, but the advice I've received from my accountant has led me to ask for my Envato account to be closed. In short, my accountant had major concerns about two parts of the issue: Invoices being written in my name that othr people/companies could then claim as expenses to my business, and money I never received being reported to the IRS by Envato.

Even though I could show that the money that I ended up keeping was accurate, after the overpayment Envato reports minus the authors fees paid back to Envato, just the fact that there would be this big discrepancy in reporting would almost surely trigger an audit. And since I don't make enough with Envato to justify the time, hassle, and cost of going through an audit, I'm better off parting ways with them.

I can deal with the possibility of being audited. Being self-employed and getting paid the way we do, it's probably almost a certainty that it will happen someday. But I'm not going to let one company speed up the process of getting the IRS to come knocking just because they think they've found a new creative way to save money.

I've been on the fence with Envato for a while now. They don't pay particularly well and the prices they set on my images were often the lowest of any company I work with. This whole tax fiasco was just the last straw.
« Last Edit: February 24, 2015, 15:30 by EmberMike »

fujiko

« Reply #96 on: February 24, 2015, 14:59 »
+12
2. Even on account closing, they don't pay out your balance unless it's over $50, so I'll watch my balance and open a support ticket at that point and they'll close my account for me.

That's amazing!
Given that they claim to be a platform and the invoice is from author to client and the client has paid, that's theft, right?

How can an invoice be paid on the client side but unpaid on the author side? Is this come kind of Schroedinger's invoice?

« Reply #97 on: February 24, 2015, 15:23 »
+10
I will also close my account. Waiting for their email... I hope a lot of people will do the same... It's even better than any D-Day  ;D

« Reply #98 on: February 24, 2015, 15:58 »
+2
2. Even on account closing, they don't pay out your balance unless it's over $50, so I'll watch my balance and open a support ticket at that point and they'll close my account for me.

That's amazing!
Given that they claim to be a platform and the invoice is from author to client and the client has paid, that's theft, right?

How can an invoice be paid on the client side but unpaid on the author side? Is this come kind of Schroedinger's invoice?

+1000

Well, time to e-mail Envato. They contribute only 2% to my overall earnings, it's not worth the hassle if they don't change things.

« Reply #99 on: February 24, 2015, 16:01 »
+3
I'd suggest everyone speak to their own tax professional before making any decisions, but the advice I've received from my accountant has led me to ask for my Envato account to be closed. In short, my accountant had major concerns about two parts of the issue: Invoices being written in my name that othr people/companies could then claim as expenses to my business, and money I never received being reported to the IRS by Envato.

Even though I could show that the money that I ended up keeping was accurate, after the overpayment Envato reports minus the authors fees paid back to Envato, just the fact that there would be this big discrepancy in reporting would almost surely trigger an audit. And since I don't make enough with Envato to justify the time, hassle, and cost of going through an audit, I'm better off parting ways with them.

I can deal with the possibility of being audited. Being self-employed and getting paid the way we do, it's probably almost a certainty that it will happen someday. But I'm not going to let one company speed up the process of getting the IRS to come knocking just because they think they've found a new creative way to save money.

I've been on the fence with Envato for a while now. They don't pay particularly well and the prices they set on my images were often the lowest of any company I work with. This whole tax fiasco was just the last straw.

Good post.  Thank you.  I just wrote envato telling them I will be dropping them if they don't get this sorted.  I make good money there.  Will cost me average of $250/month to drop them, but this tax problem is a threat to my business. 


 

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