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Author Topic: Zazzle, now also holding taxes  (Read 24809 times)

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« on: December 19, 2010, 14:49 »
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I saw this today, as I have a payment waiting and there was an alert to update my info. 

There goes 30% of my earnings there.  :(


« Reply #1 on: December 20, 2010, 08:42 »
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I forget if you're in the USA or not, madelaide, but if not, you need to send a w-8BEN form to show you don't pay US tax.

« Reply #2 on: December 20, 2010, 09:13 »
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It doesn't matter, because anyway Brazil doesn't have an income tax agreement with USA, so I have to pay the 30% (but they won't pay me until I have filled in the form).

I wonder now if this will fall in all sales, given that everything is produced in USA, even if sold in non-USA Zazzle sites.

« Reply #3 on: December 20, 2010, 11:10 »
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Are you on RedBubble - aren't they in Australia and I don't think I've heard of tax issues?  (They do have a US office, but I imagine payments would come from Oz wouldn't they?)  I was there for a while but removed my stuff a couple years ago due to the lack of watermark, don't know if that's changed.

« Reply #4 on: December 20, 2010, 11:36 »
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That's a pain - perhaps you should put your royalties up to compensate. I'm sure your business cards would sell well there, mine do and I have royalties between 25-40% depending on the card. I've got 172 and they make up most of my sales.
« Last Edit: December 20, 2010, 11:55 by gill »

« Reply #5 on: December 21, 2010, 16:40 »
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No, I am not at RB because of the watermark issue. I also find ImageKind and Fine Art America very weak on that aspect, and if you raise this issue, members even criticize you - I really don't understand, make it optional, those who don't want watermarks don't have them, fine.

I was considering raising markup prices, but anyway paying 30% tax without benefitting at all from this simply sucks. That's why I stopped my moral barrriers regarding using NASA images.  :D

« Reply #6 on: January 20, 2011, 11:29 »
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Hmm.

Got my first payment with tax bite.  But they cut 30% of all of it, not just the USA orders.  >:(

« Reply #7 on: January 20, 2011, 11:36 »
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No, I am not at RB because of the watermark issue. I also find ImageKind and Fine Art America very weak on that aspect, and if you raise this issue, members even criticize you - I really don't understand, make it optional, those who don't want watermarks don't have them, fine.

I was considering raising markup prices, but anyway paying 30% tax without benefitting at all from this simply sucks. That's why I stopped my moral barrriers regarding using NASA images.  :D

Watermarks are optional at FAA.

« Reply #8 on: January 20, 2011, 15:42 »
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Hmm.

Got my first payment with tax bite.  But they cut 30% of all of it, not just the USA orders.  >:(

Same story. Is this legal at all? I thought no matter what your copyright royalties come from (microstock, macrostock or POD) the rules are the same: only US sales are subject to tax withholding. And there is no photostock which tax non US sales income. I suggest you contact Zazzle support and IRS support as well. I already did, but the more people will ask to clarify this point as soon as possible - the more chances things will change till next payment.

« Reply #9 on: January 20, 2011, 18:43 »
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I did contact Zazzle:

Quote
The $31.17 generated a net payment of $21.82 - exactly 70%. However, of the $31.17, only $20.27 were generated in the USA. and are therefore subject to the tax. My net payment should have been 31.17-0.30x20.27, or $25.09.

They asked me my account ID, only to give me what looks like a canned answer:

Quote
Thank you for contacting customer support. Depending on your country of residence, Zazzle is required by the U.S. Internal Revenue Service to withhold federal income tax at a rate of 5% to 30% from the earnings of nonresident Sellers receiving income from U.S. sources (unless a treaty allowing exemption or a reduced rate of withholding applies). We sincerely apologize for any inconvenience that this requirement may cause.

I believe they apply the 30% because it's Zazzle USA paying me. Geez. They have separate accounting for the international sites, although they are physically all servers in US soil (at least this is the excuse for separate currencies in Volume Bonus).

« Reply #10 on: January 20, 2011, 19:18 »
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Zazzle pay us a copyright royalty from sales to customers all other the world, right? I don't see the difference between POD and photostock in this case. Shutterstock or Veer, for example, also located in USA but they withholding tax from US sales only. It doesn't matter from which zazzle site version (European or American) the sale came, the important thing is the buyer location.

If the tax law doesnt' make a difference between copyright royalty income taxation of images (illustrations, photo, video, flash etc...) and copyright royalty income taxation of physical items (print-on-demand products) then deducting a tax from non-US orders is illegal. And this is the point that needs clarification.

« Reply #11 on: January 20, 2011, 19:28 »
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I've sent them another message, again saying this should apply to US sales only.

« Reply #12 on: January 20, 2011, 19:55 »
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Can you set up a store at Zazzle uk or au and thereby avoid having to pay taxes, even if don't live in the UK or Australia? I live in Taiwan and will also end up with 30% taxes since there is no tax treaty between US and Taiwan.

« Reply #13 on: January 20, 2011, 20:02 »
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I don't know how they work. I'm starting to believe that Zazzle has no foreign offices and for tax purposes all sales generate in the USA.  :-\

I recently asked to have one store I opened in Zazzle BR closed so I could reopen it in Zazzle USA (because the titles, description and keywords in BR products were not translated to other Zazzle sites), and the reply I got is that all accounts were actually just one Zazzle and that if I wrote in English the texts would be translated (I have to try that).

« Reply #14 on: January 20, 2011, 20:04 »
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I think you are right. I went to zazzle.com.au and logged in with my regular zazzle.com info and my account looked just like on zazzle.com. Same story on zazzle.co.uk.

donding

  • Think before you speak
« Reply #15 on: January 21, 2011, 10:28 »
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Wow you are getting slapped with those taxes. I'm in the US and I don't remember even filling out a tax form like we do at the other sites. Is there somewhere we have to do that? We should have to fill one out even if we are living in the US.

« Reply #16 on: January 21, 2011, 13:00 »
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The problem is that these companies are all small (employee-wise), they don't know the tax laws any more than us, so when the tax man comes knocking, they just withhold taxes.
I don't think Zazzle has any offices outside the US.
I've been doing a lot of googling, and from what I understand, they should separate sales to other countries. Regarding tax treaties, I believe those of us from tax treaty countries should have applied for an ITIN, but Zazzle ought to know this as to get one you have to have a letter from them stating it's necessary (there's a link to the application information here http://www.irs.gov/pub/irs-pdf/iw7.pdf . In all honesty though, it's not Zazzle's problem, as it's up to individuals to find out what they need to do. As long as Zazzle do everything legally that's fine by them (and tough luck everyone else!).
I still have no idea whether I need an ITIN or not though I'm inclined to think I do - and what a nightmare that application is! (from googling, I know this has been going on on the stock sites too). Even printbusinesscards, although I asked Tim some time ago if a W-8BEN was necessary and he said no, I can't see how they're going to have any different rules in the end.
@ donding, this doesn't really apply to US residents, and I'm afraid trying to comprehend French tax laws is hard enough! You probably get a different form.

« Reply #17 on: January 21, 2011, 13:39 »
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I received my ITIN in december, and while it is certainly some bureaucratic work, it was not so terribly difficult, actually. I am glad I did it, no more worries now when another site requires it.

« Reply #18 on: January 21, 2011, 13:56 »
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They replied me again saying they have to collect the tax from the whole payment.

I think a red alert appeared to me when I reached the US$25 threshold, requiring me to fill in the non-resident form. Because I have no sales in another store, I don't get this alert there, yet.

If someone knows a link I can send to Zazzle support explaining this situation, I'll be grateful.

« Reply #19 on: January 21, 2011, 14:15 »
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I received my ITIN in december, and while it is certainly some bureaucratic work, it was not so terribly difficult, actually. I am glad I did it, no more worries now when another site requires it.

Thanks, you've spurred me on to go and do it - it's the certified copies of everything that put's me off, but hell, I got married here and that needed certified translations of everything + how many teeth your grandmother's budgie has.

I think if your country doesn't have a tax treaty Madelaide, there are no alternatives. I'm not even sure about foreign earnings in that case, you'd probably be better off finding advice from people in that country.

« Reply #20 on: January 21, 2011, 15:04 »
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gill,

I know I have to pay 30%, my issue is about Zazzle charging it for every transaction and not only originated in the USA. I guess it's because actually there is only Zazzle USA, but I don't understand how their accounting works. For volume bonus, they even separate Euros from each country, so it really doesn't make sense.

« Reply #21 on: January 21, 2011, 15:14 »
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I know - euros are euros! That really gets up my nose splitting French euros, German euros etc, it's a bit of a con, but I still think you need help from your country regarding the legality of how they split sales. I can't say, and probably no one here can. Maybe an accountant is the answer - I haven't got a hope of finding one here that knows international tax laws.

« Reply #22 on: January 21, 2011, 15:26 »
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gill,

If to pay us everything is "USA sales", then for volume bonus at least all euros should be euros - I understand they wait the 30-day period for conversion in the balance.  But if they don't really need separate accounting for each "foreign" site, they just sell in local currencies to make it more comfortable for local people, then all euros should be euros.

Anyway, the point is, where is the official definition about tax being for USA-sales only?  Even USA-based microstock sites only charge us for local sales. Unless they are wrong, Zazzle is deducting my tax incorrectly and I want to show them that.

« Reply #23 on: January 21, 2011, 16:46 »
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I understand that, but you need to get proper legal advice, not opinions from people like me who haven't really got a clue how it all works. If you find where that legal advice is, please let us know, as I haven't found it yet. And obviously Zazzle haven't got a clue either.

« Reply #24 on: January 21, 2011, 16:52 »
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I've contacted IRS via online form asking them to clarify this issue. Waiting for their reply.  In case you'll want  to contact them too: http://www.irs.gov/help/page/0,,id=120294,00.html  

Shuterstock is USA-based company too but still they never deducted tax from non-US sales. If SS and all other photo stocks did it for us -- why Zazzle can't?  I agree with Gill "they don't know the tax laws any more than us, so when the tax man comes knocking, they just withhold taxes."


 

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