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Withholding taxes-non US Submitters-answering your questions


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Thank you for your questions -- we have provided answers to some of them below and will continue to be responsive to any more questions that you have about this process. Please read all the answers before posting again, but please continue to ask questions so we can clarify or elaborate on our response.

 

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Can you explain what is happening here? In simple language?

 

US tax law imposes a 30% withholding tax on US source passive income, such as royalties, that are paid to persons who are not citizens or residents of the United States. US tax law requires the person paying the royalties to withhold the tax and pay it to the US Internal Revenue Service. If the person receiving the royalties is a resident of a country that has an income tax treaty with the United States, the withholding tax may be reduced or eliminated. However, to take advantage of the lower withholding tax US tax law requires that the person receiving the royalty payments provide a properly completed Form W-8BEN. US tax law also requires that the person who provides a Form W-8BEN for this purpose have an ITIN.

 

 

If the IRS withholds taxes from me and I live in a treaty country, am I also required to pay the full tax rate in my country of residence?

 

Many treaty countries provide relief from double taxation. The details of that relief are addressed in the tax laws of each respective country, but in general, taxes paid to the IRS by Shutterstock on your behalf will usually be reflected in some way in your remaining tax obligation.

 

 

The W7 instructions state I must submit tax returns in order to have an ITIN assigned to me. Do I really have to do this? What if I have never filed US taxes?

 

In order to apply for an ITIN, you are only required to fill out the 1-page W7 form and provide (1) proof of your identity and non-U.S. status and (2) a copy of the letter we sent you on 27 May 2009. Under Exception 1(d), on page 6 of the W7 instructions, you are not required to submit any US tax returns with your W7 application. You are only required to fill out the W7 form and provide proof of your identity and non-U.S. status and a printed copy of the letter you received from us. We have been advised that the letter you received will itself satisfy the 1(d) Documentation requirement.

 

If a contributor is a non-US resident of a country that doesn't have a tax withholding treaty with USA (such as Argentina, for example) does that mean that contributor does not have to fill any forms and Shutterstock by default retains 30% of his earnings?

 

Correct. You are only required to apply for an ITIN and provide a Form W-8BEN if you are eligible for, and wish to claim, a rate of withholding that is less than 30%.

 

What happens if our W-7 application for an ITIN is rejected? What if the IRS does not issue me an ITIN?

 

You must have an ITIN in order to complete a Form W-8BEN and claim a reduced rate of withholding under an income tax treaty. If you are not a US citizen or resident, and you do not obtain an ITIN and provide us with a Form W-8BEN, US law requires that we withhold 30% from your earnings. We urge you to begin the W7 application process for an ITIN as soon as possible if you live in a treaty country.

 

Please give us a clear date by which we must complete this process.

 

We are not going to withhold any taxes from the payment scheduled to go out in about 1 week - the early June payment. Our goal is to provide our submitters with enough time and correct information to fill out the appropriate paperwork so that they may benefit from a reduced or zero withholding rate if there is an applicable treaty. As stated earlier, we will be staging the tax documents in a secure area of our submit site. Your first objective should be to obtain an ITIN number.

 

 

The W8 instructions seem to imply that we do not need an ITIN.

 

From the W8BEN instructions:

 

Expiration of Form W-8BEN. Generally, a Form W-8BEN provided without a U.S. taxpayer identification number (TIN) will remain in effect for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. For example, a Form W-8BEN signed on September 30, 2005, remains valid through December 31, 2008. A Form W-8BEN furnished with a U.S. TIN will remain in effect until a change in circumstances makes any information on the form incorrect, provided that the withholding agent reports on Form 1042-S at least one payment annually to the beneficial owner who provided the Form W-8BEN. See the instructions for line 6 beginning on page 4 for circumstances under which you must provide a U.S. TIN.

 

Does this mean we can leave the ITIN field blank and have it expire in 3 years?

 

No. This rule only applies to persons who previously provided a Form W-8BEN without an ITIN because that person was receiving a different category of income. In order to claim a reduced rate of withholding under an income tax treaty, US law states that you must provide us with a Form W-8BEN that includes an ITIN.

 

 

If I get an ITIN do I qualify for other US benefits?

 

No. If you are not a US citizen or US resident an ITIN is only used to identify you for US tax purposes.

Do I need to provide a copy of my passport?

 

No. The US Internal Revenue Service will accept other forms of identification to establish your identity and your status as a resident of country with an income tax treaty with the US. Please see the W7 instructions for a complete list of acceptable ID.

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Does SS plan to open other offices around the world so 'non-USA' residents wont have to go through this this nonsense?

 

I will not fill out these forms and will remove my images once next payout has been reached but will keep my account open in the hope that SS sees sense and sets up other offices for 'non-USA' submitters.

 

Disapointed.

 

:-(

 

Tony

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So for this programme

First,I must filing a Form W-7 for IRS Individual Taxpayer Identification Number.Then send this form to IRS or IRS-authorized.The IRS will return this code to me by mail(or email?).Last will fill online Form W-8BEN.

 

Is this complete programm for whole thing?

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Hi SS,

 

Can you tell us why we are not told about this sooner?

 

The timescales are unreasonably short - and you have not explained why.

 

Also, you have not explained how we will get our tax returned. Will you provide the documentation that our individual country's tax departments require?

tnx

x

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also, it looks like at least all UK citizens will need their passport.

 

The list of suitable ID is mainly US ID - and in the UK we dont have national ID cards or military service cards.... - many will have a driving licence but you need 2 pieces of this id.

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So basically you, the SS, are going to withhold 10% if I fill in the form, from whatever money I will have made untill I get my 1st payment [01-August-2009], because you enforced a rule that limits my ability to receive my money in less than 90 days. That's just unacceptable, please consider sending me the money I have made so far. as I might consider continuing submitting content.

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I have more question

 

1.)

Do I need to provide a copy of my passport?

 

No. The US Internal Revenue Service will accept other forms of identification to establish your identity and your status as a resident of country with an income tax treaty with the US. Please see the W7 instructions for a complete list of acceptable ID.

 

SO I don't have to give legalized copy of my passport just adding more acceptable ID as my citizen ID coz the cost to have my passport's copy legalized is very high in my country

 

 

2.)

If I paid that taxes said 10% for treaty country where I am citizen in, do I get legalized copy of the tax payment? and can I use it to report in my country tax office, so I will not get double tax but only pay the difference as my current state i paid 25%, so I just need to pay the other 15%? Or do I have to pay double tax?

 

thanks

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quote

Please give us a clear date by which we must complete this process.

 

We are not going to withhold any taxes from the payment scheduled to go out in about 1 week - the early June payment. Our goal is to provide our submitters with enough time and correct information to fill out the appropriate paperwork so that they may benefit from a reduced or zero withholding rate if there is an applicable treaty. As stated earlier, we will be staging the tax documents in a secure area of our submit site. Your first objective should be to obtain an ITIN number.

 

you haven't really answered the question. Your statement is not a clear date. the impression is still that we have about 4 weeks to provide you a form that will take a minimum of 8 (and some cases much longer). There are a number of other questions that relate to this as well but may not be relevant dependant upon the answer.

 

also will SS provide official income statements for our governments when we request them?

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hi ss.

 

Here are many of the points that came up again and again in the threads - but they are points you have not addressed yet.

 

1. the timescales for completion of the paperwork are not feasible for a 'reasonable' person.

 

2. The expense and difficulties involved in application are large.

 

3. People do not wish to provide personal data to the US government for privacy and ideological reasons

 

4. Many do not understand the process and are confused by the language

 

5. we are uncertain of what support you will provide to claim back the 30% from our own countries' tax departments.

 

 

Please can you address these concerns, because i dont think your answers are going to settle anyone...

x

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I am resident of a country that does not currently have a treaty with US about this, does it mean that I don't have to send in any form? If IRS receives 30% witheld amount in my name from shutterstock, is there any additional documentation that I must provide for this to be legal on my behalf?

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I am from UK and I can get out of this, anyway. Either your way or my way, I can sort this awful thing.

 

But what about people in countries which do not have a treaty with US.

 

This is unacceptable. %30 is a joke.

 

That's something SS should sort out. People who have nothing to do with america should not worry about this and should just go to court to settle this thing.

 

My questions:

 

1- Will you let the potential future submitters know that their earnings will be deducted by %30?

 

2- How many of the potential future submitters do you think will bother to sign up knowing that their 0.25 cent's commission per download will be further deducted by %30.

 

You could never give this info to a future submitter in advance, that you will actually pay them a whopping 0.17 cents per download.

 

I am looking forward to SS updating the submitter sign-up page to tell the truth now, that SS will be paying them 0.17 cents per download.

 

Guys, you can't be serious. This is your responsibility. SS was a great place so far. I was even referring to you on another forum for the good things you have achieved but I see I was wrong.

 

As I said, if you insist on not to solve this problem the way it should be solved you are not going to be getting much support.

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Do I need to provide a copy of my passport?

 

No. The US Internal Revenue Service will accept other forms of identification to establish your identity and your status as a resident of country with an income tax treaty with the US. Please see the W7 instructions for a complete list of acceptable ID.

 

yep most of which are US issued like a US citizenship certificate LOL. The reality is most people will have to send 2 of passport / birth certificate / drivers licence

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Hi SS,

 

Can you tell us why we are not told about this sooner?

 

The timescales are unreasonably short - and you have not explained why.

 

x

 

I agree and think it is very rude and arrogant and the 'answers' just provided really say next to nothing and skipped a lot of peoples concerns.

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I am resident of a country that does not currently have a treaty with US about this, does it mean that I don't have to send in any form? If IRS receives 30% witheld amount in my name from shutterstock, is there any additional documentation that I must provide for this to be legal on my behalf?

 

You can't send a form because there is nothing you can do apparently. %30 will be deducted from your earnings anyway! Nice? Isn't it?

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I have some questions, just to make my mind clear.

I've found this article in the IRS web about withholdings: http://www.irs.gov/pub/irs-pdf/p515.pdf

 

For what I understood, in page 3, a foreign person is subject to U.S. tax on its U.S. source income.

But SS is acting as an U.S. agent of foreign person (page 4) and the payments made to him are considered as made to the foreign person. Am I right? SS in not an employer, is just a U.S. agent.

Now, since we do not know where are the origin countries of the people that buy our stuff, but I'm pretty sure they are from all over the world, why should we pay a tax for an income that it is not from a US source? Because apparently the tax is aplied to our total income, no matter where the buyer is. Different is if SS acts as a buyer, but I guess it is not the situation.

 

Thanks in advanced for clarifying this.

 

 

Flavia.

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Hi,

 

I have one question. I think many of us work not as inviduals but through some sort company form (in many countries it is easiest way to handle taxes etc.). In our case we have privately owned limited company and payments are going to companys bank account and ends up companys book keeping.

 

What is the correct approach to this IRS thing if you operating from company?

 

Because our business is limited company (company location is in Finland) everything must be correct (no invidual irs number can be used as tax reduction in this side or similar) in bookeping and since book keeping laws etc controls our business.

 

best regards: Mikko Pitkänen

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I have some questions, just to make my mind clear.

I've found this article in the IRS web about withholdings: http://www.irs.gov/pub/irs-pdf/p515.pdf

 

For what I understood, in page 3, a foreign person is subject to U.S. tax on its U.S. source income.

But SS is acting as an U.S. agent of foreign person (page 4) and the payments made to him are considered as made to the foreign person. Am I right? SS in not an employer, is just a U.S. agent.

Now, since we do not know where are the origin countries of the people that buy our stuff, but I'm pretty sure they are from all over the world, why should we pay a tax for an income that it is not from a US source? Because apparently the tax is aplied to our total income, no matter where the buyer is. Different is if SS acts as a buyer, but I guess it is not the situation.

 

Thanks in advanced for clarifying this.

 

 

Flavia.

 

flaps. That is what I was thinking exactly. SS is not the source of my income. US is not the source of my income.

 

My files and worldwide customers are the source of income. SS is the agent. I am sorry, I am pretty sure I am correct here.

 

SS will have to earn it in court if they want to deduct my %30. I am not giving my private info to US authorities. I am already a UK tax payer. I said it before, I can only go as far as providing my UK tax payer reference.

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