Strange payment from Zazzle

[madelaide]

Today I received a payment from Zazzle - US$5.97.

I have a payment due tomorrow, US$29.95, probably will get a tax deduction on it. But not only the amount above isn't equivalent to the net value I am supposed to receive (70% or US$20.97) nor my balance shows it as paid.

I thought that maybe that had realized they had charged tax wrongly, but that doesn't match with 30% of my non-USD sales on the previous payout either.

Anyone got that too?

[donding]

Mine was normal...it wasn't from your volume bonus was it...maybe with the account merging?

[TheSmilingAssassin]

Today I received a payment from Zazzle - US$5.97.

I have a payment due tomorrow, US$29.95, probably will get a tax deduction on it. But not only the amount above isn't equivalent to the net value I am supposed to receive (70% or US$20.97) nor my balance shows it as paid.

I thought that maybe that had realized they had charged tax wrongly, but that doesn't match with 30% of my non-USD sales on the previous payout either.

Anyone got that too?

Hi madelaide,

They have charged you tax for previous months where they should have charged you but didn't.    I was short in my payment too and the amount I was short worked out to be exactly to the tax amount of those months that I wasn't charged (but should have been charged). 

It didn't hurt me much and I can see that it didn't hurt you much either but it's going to sting those well established high earners!

[madelaide]

I had only one payment this year and I checked if the value corresponded to the non-USA sales, it didn't. But I have to check it again, because I often have non-dollar sales from USA buyers and dollar sales from non-USA buyers, so this may be the reason for the difference.

Nice to see they took the right step.

[TheSmilingAssassin]

I had only one payment this year and I checked if the value corresponded to the non-USA sales, it didn't. But I have to check it again, because I often have non-dollar sales from USA buyers and dollar sales from non-USA buyers, so this may be the reason for the difference.

Nice to see they took the right step.

Hi madelaide,

No you�ve misunderstood what I wrote.  This isn�t a back �payment� from Zazzle... we wish!  This is a backcharge from them.  This is going to make you furious...

You were due a payment of $20.97 ($29.95 less 30% tax).  Instead, you received this:

$29.95    (January�s earnings)
$8.99      (30% tax on January�s earnings)
$15.00     (30% tax on previous months earnings you weren�t previously charged)

Zazzle began charging us tax on November�s earnings so they are now backcharging us tax on earnings from October and prior.  I don�t know how far back it goes because I only joined in August so I got charged on earnings from August to October.

It�s pretty bad that they�ve gone ahead and backcharged us tax when it was their error that they didn�t collect it previously.  Dreamstime started charging it late and didn�t backcharge.  I can�t understand how Zazzle did.  It�s going to make a lot of people angry, especially the high earners who have been around for a long time.

[madelaide]

That really sucks, but I can not get to that number.

My first payment was in July 2010, US$68.31, so if they would be charging me 30% that would net me just 47c (29.95*0.7-68.31*0.3).  Or are sales prior to 2010 not being charged?

Geez, how can I make them understand they are not to charge us for non-USA sales??

PS: Zazzle payment history still shows the latest payment as "pending", but that may be a glitch from the current site transition.

[TheSmilingAssassin]

Yeah Zazzle takes a while to clear payments, even though they're paid.

With regards to the month they began deducting tax, I can't really tell you.  I joined Fotolia in April 2010 and they were already deducting tax so I'm assuming Zazzle would go back prior to Jul, 2010.

Also, it's possible that they're backcharging in stages.  I'd say they'd have to for some people.  Do you have any months that calculate to $15?  maybe a group of months?

I'd ask you to contact support but they're bloody hopeless lol

[lock_stock]

What they do now is a backdate tax withholding for 2010, they will deduct it during all 2011   It will be divided equally among our remaining payments for 2011... 

[jm]

I'm bad accountant but this seems so be just crazy. My country has a tax treaty or how it is called with U. S. and I have already sent my Declaration of Taxes for 2010 to authorities.
I doubt that authorities are so open minded and do not care that my total income is just some approximate figure because I do not know how much I made at Zazzle because they solve taxation of my US income with one year delay.

[madelaide]

Got a sort of tax statement from them today (snail mail) and an email explaining the tax deductions regarding last year. It really sucks. I don't know how to make them understand they are not charging us correctly. They don't want to hear it and say we should ask IRS about the taxes - but this is nor IRS' fault, and I don't deny I have to pay taxes, but should be just USA sales. I will write IRS but I'm sure they receive tons of emails and mine will possibly never be really answered. And no matter what IRS replies to me, Zazzle doesn't want to hear. 

Dear Zazzler,

Since the beginning of 2011, you may have noticed that your Zazzle earnings were reduced each month due to tax withholding. As we messaged at the beginning of the year, Zazzle is a United States-based company and is required by the U.S. Internal Revenue Service (tax authority) to withhold U.S. federal income tax at a rate of up to 30% from the earnings of nonresident Zazzle Sellers. (Treaties may exist between the United States and other countries, which permit Zazzle to withhold a lower portion of a Zazzle Seller's earnings, as low as 0% in certain cases).

The total amount of withholding from 2010 will be divided equally among your remaining payments for 2011.* This month, you should also receive an annual United States Internal Revenue Service Form 1042-S. We recommend that you consult a tax advisor in your country of residence to determine your obligation to file a U.S. federal income tax return as well as your ability to receive credit from your own country's taxing authority for these taxes, which have been withheld by Zazzle and paid to the U.S. Internal Revenue Service on your behalf. If you have any further questions, please reply to this email.

[madelaide]

So, I got a form from Zazzle with the amount held from 2010 sales - US$20.49. But the 5.97 I got this week does not match either:
- my last payment (29.95) minus its 30% tax minus the 2010 tax (29.95-8.99-20.49=0.47)
- my last payment (29.95) minus the 2010 tax (29.95-20.49=9.46)
I have to ask them about this.

This is such a turnoff....

[lock_stock]

madelaide

they take all payments we got in 2010, take tax % from it (30% in you case) and divide it equally to 10 months of 2011 starting from this March.  Earnings - tax - divided 2010 tax.

I'm sure IRS will send you a reply within a week ot maximum two. Just try to not go too much into details because they prefer to give answers to general questions. The determinant in our case is the word "used" (Publ. 519, U.S. Tax Guide for Aliens.). If "used" is interpreted by IRS as "used by buyer" (and not a POD company) then our royalty from non-US sales are 100% non-taxable.

[madelaide]

lock_stock,

Maybe this is not a general rule, at least it doesn't match my case either:
- my last payment (29.95) minus its 30% tax minus 1/10th of the 2010 tax (29.95-8.99-2.05=18.91)

I've written to Zazzle, let's see if tomorrow they explain my case.

In my understanding, Zazzle would only be the user if they purchased a license of our IP to sell in their site. To me here we have a clear partnership, in which we enter with the design and Zazzle enter with the item production and shipping.

[lock_stock]

madelaide

I agree wtih you completely and like you I'm sure royalty from nonUS sales are non-taxable. If we'll get official clear interpretation of "used" as used by customer from IRS - this, I hope, will change the situation on Zazzle, I'm sure Zazzle is not interesting in doing smthing that obviously illegal. However, if it won't help as well, at least I can take IRS response and consult a lawyer about next steps.

[madelaide]

The problem - and I said so to Zazzle - is that no matter what IRS replies to us, they won't accept it. I think they are just taking the easy and safest way for them - charge everything, don't bother separating what is US-based or not. How can I appeal?

It becomes perhaps even more difficult for them to administer situations like I've seen, people from USA buying in "foreign" Zazzle (I've seen Canada and UK) and non-USA people buying on USA. But it's their problem, not ours, if tehy can not make their accounting correctly.

No reply from support regarding my payment.