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Author Topic: IRS Withholding Taxes for non U.S. Submitters  (Read 96592 times)

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« Reply #250 on: May 30, 2009, 19:00 »
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Great majority of contributors are not from US. Many (and I mean MANY) very important contributors are from eastern Europe. So, I wouldn't be happy if they leave, because Shutterstock will be pretty empty, and those who stay won't be able to attract so many buyers.
I don't want this to happen.

I am from Serbia, and I have only two choices:

1. To give 30% of my income to USA
2. To leave Shutterstock

This law is not new, it's pretty old actually.
I would like all this to finish in a good way for us, but I am not very optimistic...
To be honest, when I saw the post of SS CEO I was in shock and I was very disappointed. I really didn't expect that kind of reaction.. Even now I don't expect something much better for us.
« Last Edit: May 30, 2009, 19:02 by Whitechild »


« Reply #251 on: May 30, 2009, 19:22 »
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..First, as you are fully aware, the Internet was created by the United States under the supervision of Nobel Peace Prize Laureate Al Gore.  There would be no such thing as the Internet if it weren't for good old Al.  Since the U.S. created the Internet, it is only fair that it reaps the rewards from any commerce done over the Internet.  ;)
I don't think Al Gore would of got very far without the invention of Alexander Graham Bell.  Perhaps the Scottish should reap the rewards of the telecom industry :)

Ever heard of Tesla , with your logic about rewards based on his patents  somebody would own something to this part of the world big time , probably for every single button that was pushed in the world today , and that would not be all

« Reply #252 on: May 30, 2009, 19:27 »
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..First, as you are fully aware, the Internet was created by the United States under the supervision of Nobel Peace Prize Laureate Al Gore.  There would be no such thing as the Internet if it weren't for good old Al.  Since the U.S. created the Internet, it is only fair that it reaps the rewards from any commerce done over the Internet.  ;)
I don't think Al Gore would of got very far without the invention of Alexander Graham Bell.  Perhaps the Scottish should reap the rewards of the telecom industry :)

Ever heard of Tesla , with your logic about rewards based on his patents  somebody would own something to this part of the world big time , probably for every single button that was pushed in the world today , and that would not be all
What about Michael Faraday?

« Reply #253 on: May 30, 2009, 19:32 »
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Guys, wasn't GeoPappas just ironic? :)

« Reply #254 on: May 30, 2009, 19:34 »
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I'm actually surprised more people weren't banned.  The level of outrage over something SS has no control over, plus the ensuing misinformation that was being spread, was pretty ridiculous and very unprofessional on the part of some of the contributors.  Thank goodness calmer heads prevailed over here at Microstockgroup where accurate information can be shared. 

Absolutely __ well said. The hysterical outbursts were ridiculous.

If it weren't for contributors that part of taxing only sales from US buyers would not be mentioned ,they didnt have an answer on
most important questions ...and first reaction on contributors unprofessional behavior was especially  professional  

I agree with that part that something was ridiculous

« Reply #255 on: May 30, 2009, 21:53 »
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The CEO rant post has been removed.
Thats hilarious :)

Perhaps he was banned  ;D

« Reply #256 on: May 30, 2009, 22:11 »
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Quickly over-reading all this some logical issues popped up in my mind.

1. Taxes have to be paid since buyers deduct their costs from their own taxes. The problem is with non-US buyers that deduct the costs from their government's taxes but that's not a contributor's issue.

2. By taxing gross income and not net income, the IRS denies the costs involved in making the images. For many contributors, costs are probably higher than their income. The IRS considers royalties as "passive" income. It's not. The right way should be that contributors are taxed in their own country where they also have the means to deduct their costs.

3. The red tape involved in all this is huge, depending on your nationality, place of residence and fiscal status. SS could help by negotiating a group deal with the IRS where they handle all the red tape themselves, after collecting passport copies (certified or not).

« Reply #257 on: May 30, 2009, 22:37 »
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Guys, wasn't GeoPappas just ironic? :)

Yeah, I thought he was being funny as well.

« Reply #258 on: May 30, 2009, 23:09 »
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Quickly over-reading all this some logical issues popped up in my mind.

1. Taxes have to be paid since buyers deduct their costs from their own taxes. The problem is with non-US buyers that deduct the costs from their government's taxes but that's not a contributor's issue.

2. By taxing gross income and not net income, the IRS denies the costs involved in making the images. For many contributors, costs are probably higher than their income. The IRS considers royalties as "passive" income. It's not. The right way should be that contributors are taxed in their own country where they also have the means to deduct their costs.

3. The red tape involved in all this is huge, depending on your nationality, place of residence and fiscal status. SS could help by negotiating a group deal with the IRS where they handle all the red tape themselves, after collecting passport copies (certified or not).

#2 doesn't sound true as deduction are taken off gross income. You are then taxed on the adjusted gross income.
I'm guessing it would be the same for the companies/people buying the from SS. It would be an expense that comes off of the gross income.

Red tape is probably just as big a problem for Americans wanting to do business in other countries. I know from US to Canada isn't a picnic either. Lots of red tape there.  People are just going to have to do what needs to be done for them. It sucks, but with the slow economy here I imagine the government is coming up short and started looking for the missing taxes.  SS won't be the last stop on the IRS' rampage.
 Good luck to all. Don't give up.

« Reply #259 on: May 31, 2009, 01:22 »
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I doubt that SS will be deducting your expenses (gear, models, travel, whatever) before calculating the withholding tax.

« Reply #260 on: May 31, 2009, 01:24 »
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I'm actually surprised more people weren't banned.  The level of outrage over something SS has no control over, plus the ensuing misinformation that was being spread, was pretty ridiculous and very unprofessional on the part of some of the contributors.  Thank goodness calmer heads prevailed over here at Microstockgroup where accurate information can be shared. 

SS do have control over it, Jon could move the company offshore like all his competition, then the problem would go away. This issus is probably the reason why the majority of MS agencies aren't located in the US. You have to feel for those who live in non treaty countries, loosing 30% of bugger all really would make one question the worth of joing SS.

« Reply #261 on: May 31, 2009, 01:27 »
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In theory - and I really mean IN THEORY, cause I have not tested this of course, and I am talking about the Belgian tax situation, which happens to be one of the countries where one pays A LOT of taxes :

1. Most contributors still have another income, and this income (let's call it JOB INCOME) is probably higher than Microstock income.
2. That means Microstock income and Job income are added together to be taxed in your own country (let's assume at an average percent of 25%).
3. You send in your tax return to your country's government, and deduct your expenses.
4. Now this gets tricky :  indeed, many of us have more photography expenses than photography income, yet we do not deduct every expense, for the simple reason that if you would do that, you would have a negative microstock income, and the Tax Inspectors would accept that for your first start-up year, but not every year.  So let's assume your job gives you a net income of 20.000 (dollars, pounds, euros, not important), and your photography an income of 10.000 minus 7.000 expenses = net income of 3.000.  3000 extra income x 25% local taxes = 750 to be paid extra to your government.
5. Shutterstock pays you 10.000, of which 50% is of US buyers, so 5.000 x 30% = minus 1500, so you are paid 8500 instead of 10.000.
6. On your tax return, you put the 7000 expenses, but also the 1500 prepaid taxes.
7. 750 national taxes minus 1500 prepaid taxes = less than 0, so you don't have to pay anything to your local government anymore (at least for your photography income).
8. As I understand the treaty system, every country on the treaty list agreed to avoid double taxing of their citizens, but I don't think that all these countries pay eachother what they collected.  So the USA will not pay the 1500 to Belgium, and Belgium will not pay to the USA what they collected from US people living in Belgium.
9. That means that in the end, you will have paid 1500 + 0 local taxes, which is more than 25% on my net photography income.
10. Conclusion :  if your country has a treaty, you MUST do the paperwork, so that Shutterstock will not deduct anything.  If not (like Serbia?), you should absolutely find out how to report the pre-paid US taxes on your national tax return, and which documents are needed to prove it.

I repeat, this is purely theoretical.  Any one here who can back up the theory ?

« Reply #262 on: May 31, 2009, 06:08 »
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I've been dealing with this for the last 20 years and that how it works.

« Reply #263 on: May 31, 2009, 09:36 »
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I doubt that SS will be deducting your expenses (gear, models, travel, whatever) before calculating the withholding tax.
Individuals will need to do their own tax returns to do this. I would think if someone gets stuck paying the 30% tax, that in theory you would also be able to (may be required to) file a tax return. Which is where you calculate the taxes actually owed.  Any overpayment would be refunded.

« Reply #264 on: May 31, 2009, 14:55 »
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I'm actually surprised more people weren't banned.  The level of outrage over something SS has no control over, plus the ensuing misinformation that was being spread, was pretty ridiculous and very unprofessional on the part of some of the contributors.  Thank goodness calmer heads prevailed over here at Microstockgroup where accurate information can be shared. 

SS do have control over it, Jon could move the company offshore like all his competition, then the problem would go away. This issus is probably the reason why the majority of MS agencies aren't located in the US. You have to feel for those who live in non treaty countries, loosing 30% of bugger all really would make one question the worth of joing SS.

From what i gather, and to the best of my knowledge of the information available, and conceding that i may be incorrect.... SS have confirmed in their forum that they are not considering the option of opening an offshore office. However, please check SS official policy with regard to this - I cannot make claims about the factual accuracy of this information.
« Last Edit: May 31, 2009, 14:59 by luceluceluce »

« Reply #265 on: May 31, 2009, 15:42 »
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I'm actually surprised more people weren't banned.  The level of outrage over something SS has no control over, plus the ensuing misinformation that was being spread, was pretty ridiculous and very unprofessional on the part of some of the contributors.  Thank goodness calmer heads prevailed over here at Microstockgroup where accurate information can be shared. 

SS do have control over it, Jon could move the company offshore like all his competition, then the problem would go away. This issus is probably the reason why the majority of MS agencies aren't located in the US. You have to feel for those who live in non treaty countries, loosing 30% of bugger all really would make one question the worth of joing SS.

From what i gather, and to the best of my knowledge of the information available, and conceding that i may be incorrect.... SS have confirmed in their forum that they are not considering the option of opening an offshore office. However, please check SS official policy with regard to this - I cannot make claims about the factual accuracy of this information.
Hi Lucy, sorry to see you were silenced at SS Is that permanent?

Yes, I read somewhere that SS won't be setting up off-shore offices. The problem is, if the IRS perceives that a new office was set up to avoid taxation, they will charge SS with tax evasion. Which would probably put SS out of business. If SS had opened an office somewhere else BEFORE all this mess, then it would not have the "appearance" of evading taxes. But it's too late now.

« Reply #266 on: May 31, 2009, 15:50 »
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I believe what that means is that if the buyer is in the US - you will get taxed the 30% if you dont get your ITIN and W8 to them (or 30% if your country has no treaty with the US)

If the buyer is not from the US (lets say the buyer is from Europe) you will not be taxed at all even if you dont get your ITIN and W8 done.

Thats how I am reading it.

That's how I understand it too.

So, surely it shouldn't be too difficult for Shutterstock to introduce an 'opt out of selling to US buyers' box, just as they have opt in/out choices for Per picture sales / Partners, CD-A-Month Service, Enhanced License and so on.

However, from what I understand reading the forums, they are not considering this at all.


« Reply #267 on: May 31, 2009, 16:08 »
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This was never just about losing personal income. For many it has a significant ethical and political dimension. 


Absolutely agree. I have no connection at all with the USA, never been there, no intention of going, and I don't see why I should pay any money, no matter how little, into their Government coffers.

I mean ... apart from anything else ... aren't they already the richest country in the world? Why do they need to suck in money from others, many of whom live in far poorer countries and, like me have no connection with the US?

I don't wish to give the US Government a pile of my personal data, either. I declined an offer to join another US agency for that reason.

I'm seriously considering pulling my portfolio from SS.

« Reply #268 on: May 31, 2009, 16:54 »
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Could it be that most critics of the US withholding tax have never before declared their income to their local fiscal authorities and for the first time realize that microstock is a business and that tax fraud is a crime?

Withholding taxes do exist in a lot of countries and you get back overpaid amounts when filling out your yearly tax declaration.  Why should a honest taxpayer have a problem with that?

« Reply #269 on: May 31, 2009, 17:08 »
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I'm actually surprised more people weren't banned.  The level of outrage over something SS has no control over, plus the ensuing misinformation that was being spread, was pretty ridiculous and very unprofessional on the part of some of the contributors.  Thank goodness calmer heads prevailed over here at Microstockgroup where accurate information can be shared. 

SS do have control over it, Jon could move the company offshore like all his competition, then the problem would go away. This issus is probably the reason why the majority of MS agencies aren't located in the US. You have to feel for those who live in non treaty countries, loosing 30% of bugger all really would make one question the worth of joing SS.

From what i gather, and to the best of my knowledge of the information available, and conceding that i may be incorrect.... SS have confirmed in their forum that they are not considering the option of opening an offshore office. However, please check SS official policy with regard to this - I cannot make claims about the factual accuracy of this information.
Hi Lucy, sorry to see you were silenced at SS Is that permanent?

Yes, I read somewhere that SS won't be setting up off-shore offices. The problem is, if the IRS perceives that a new office was set up to avoid taxation, they will charge SS with tax evasion. Which would probably put SS out of business. If SS had opened an office somewhere else BEFORE all this mess, then it would not have the "appearance" of evading taxes. But it's too late now.
Eva_ers! : ) : ) : ) : ) : ) : ) - u r officially a 6 smiley funny guy

Also........ the question is still being raised about referral income.  Which would multiple the tax complexities exponentially.  (check me out using big words when i fundamentally know crap all about tax complexities!)

Doesnt it need superhuge department of accountants and lawyers to figure it all out?  I wouldn't put my money on the off-shore or the opt-out options being dead yet....

Somebody made the v good point that the UK stopped withholding tax on royalties because they found it damaged home-grown industries...  Let us hope this is not the start of the 'taxing of the internet' - because the tax departments of other countries might follow suit - and then we'll ALL be multiplyhorrifically taxed
x

« Reply #270 on: May 31, 2009, 17:12 »
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Could it be that most critics of the US withholding tax have never before declared their income to their local fiscal authorities and for the first time realize that microstock is a business and that tax fraud is a crime?

ummm... NO!

« Reply #271 on: May 31, 2009, 17:16 »
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I have no connection at all with the USA.


Who if not you took the decision to sell your images in the US and sign a contract with a US company called Shutterstock?

If microstock only works with financial headquarters in shady offshore locations then I would question if it is a healthy business model at all.

« Reply #272 on: May 31, 2009, 17:20 »
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Could it be that most critics of the US withholding tax have never before declared their income to their local fiscal authorities and for the first time realize that microstock is a business and that tax fraud is a crime?

Withholding taxes do exist in a lot of countries and you get back overpaid amounts when filling out your yearly tax declaration.  Why should a honest taxpayer have a problem with that?

Aaah! the 'methinks the lady doth protest too much' argument.  I think in any group of people, microstocker, fishmongers, whatever, you find similar ratios of cooperators to cheaters.

I do not believe that any conclusions can be reached about the honesty of the critics of the tax, if your only evidence is merely the fact that they are 'critics'. The connection is so spurious that Im
utterly
curious
why it's your belief
that i could be a thief .

: )  cmon! play fair
« Last Edit: May 31, 2009, 17:24 by luceluceluce »

« Reply #273 on: May 31, 2009, 18:07 »
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... Let us hope this is not the start of the 'taxing of the internet' - because the tax departments of other countries might follow suit - and then we'll ALL be multiplyhorrifically taxed
x

I'm afraid it's only a matter of time before governments figure out a way to tax internet commerce. There is so much money being made over the 'net, governments are positively drooling to get their hands on it. As I heard on the radio once, "Money is the politicians' drug of choice."

« Reply #274 on: May 31, 2009, 18:11 »
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Oh, and Lucy, thanks for all the smileys. I will send an official application to you to recoup my other two as soon as I have my W8EN (W8 Emoticon Number).


 

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