"I can help you!"

I NO LONGER WORK AS A BOOK MARKETING COACH; I'M THE PUBLISHER AT IMAJIN BOOKS.

I've worked for over 25 years in advertising, promotions and sales, and spent nearly 2 years as a motivational speaker for a major international company. Currently a bestselling novelist and 'shameless' promoter, I've shared my experiences and techniques as a Book Marketing Coach for nearly a decade.

Whether you're published or unpublished, I can help. My last publisher called me a "marketing guru" and "whiz", although I prefer to think of what I do as teaching, or coaching.

"Dare to Dream...and Dream BIG!"

Tuesday, September 29, 2015

UPDATED: September 2015 - Amazon's KDP, Smashwords, Withholding Tax, International Authors, ITIN and EIN

As a Canadian author using Amazon's Kindle Direct Publishing (KDP), my journey has been less than hassle free, so I'm posting today to help other non-US authors get through the headache of withholding taxes and IRS forms.

If you're a non-US author and you've noticed your royalty checks don't match your numbers online, it's most likely because a withholding tax has been implemented--30% on average. But there's a solution.

First, a non-US resident and DTP publisher/author does NOT need a US address or a US bank account. Amazon will mail you a check or via direct deposit.

However, Amazon will withhold approx. 30% of all earnings of non-US residents UNLESS authors have an ITIN or EIN, which you must get from the IRS.

FYI, this is how I did it a few years ago when everyone said I needed an ITIN. But I should warn you--it's much easier now, and I'll tell you exactly what you need to do after I share my experience.
Don't apply for an ITIN!!!

1. I contacted an "Acceptance Agent" in my city. There's a list of Canadian Acceptance Agents (and US and International Acceptance Agents) on the IRS website.
2. I had Smashwords send me a letter stating I was selling my books through them. You need one letter only from one distributor, and when I asked Amazon they were completely uncooperative and refused to send me the letter.
3. I filled out the W-7 form at the Agent's office, he photocopied my passport and he sent these out along with the letter from Smashwords (who are aweseome about giving letters).
4. It took about 7 weeks before I got my letter from the IRS with my ITIN.
5. Then I filled out the W-8BEN form and sent one to each US distributor (Amazon, Smashwords etc). From that point on, I've received 100% of my royalties due; no tax was withheld.

Smashwords has great instructions on all this on their site. I don't know why Amazon hasn't done the same. Smashwords also has links to all the forms and the address for sending the W-8BEN. Again, Amazon could take some pointers on customer service.

As per Smashwords, here are the important links you need:
Is this a hassle? Most definitely. That's why I no longer recommend this way. Get an EIN!!!

Is it worth it to get an EIN? Yes. Why should 1/3 of my earnings be held back? I'm Canadian, I pay my taxes here.

Does anyone know the correct mailing address for sending in the W-8BEN form to Amazon?

"We need to receive a physical copy (paper form) of the W8 that contains a US tax id and that is signed in blue ink. Please put the supplier code/vendor code, vendor code: DUVNS in the upper right hand corner and then mail it to the below address. As soon as we receive it, we will update the account and reimburse withholding that has been deducted this year. Note: withholding can only be paid back in the current year it was deducted.

Amazon Digital Services
Attn: Vendor Maintenance
PO Box 80683
Seattle, WA 98108-0683

If you have further questions, please write back to us at dtp-support@amazon.com."

Please note that you may want to check to ensure that the "supplier code" is the same for everyone. I have no idea if it is or if it's linked to my account only. If you know the answer, please email me at cherylktardif (at) shaw.ca.

UPDATE 3: Sept 29, 2015 - Forget the ITIN. Get an EIN instead. It's much easier and FREE!

Get an EIN by phone via the IRS's toll-free number: (800) 829-4933.

UPDATE 2: One writer reported to me that the supplier code was different than mine, so your best bet is to email DTP support and ask them.

UPDATE: May 18, 2011 -
- Createspace will send you the letter you need to get the ITIn rolling, if you sell your books via them.
- Smashwords has a Google Chrome bug that is preventing emails to go through to them via the customer support link at the top of Smashwords.com. If you've emailed them about this or any other matter and haven't heard back from them in 3-5 days, your email may never have reached them. They're working on this issue. In the meantime, try IE or another browser.

- From Mark Coker at Smashwords: "At Smashwords, authors request the letters through their payee profile at https://www.smashwords.com/account/payee. They can request the letter once their account balance reaches $10.00."

Cheryl Kaye Tardif

31 comments:

Keith McLachlan said...

Thanks, appreciate the heads-up on your experiences. Dealing with governments and taxes is never fun...

My new book (fyi - http://www.amazon.com/dp/B004QS95SU ) is starting to get good volumes, so as the series rolls out I can see myself consulting this blog entry for help on the tax issue..

wyesined said...

Thank you very much for this. I have a question though, I don't have an agent, could I just photocopy my passport myself and send the W7 with the smashwords letter directly to IRS?

Thank you very much!

Denise

http://www.denisewy.com

Cheryl Tardif said...

Hi Denise,

You can go through the process yourself, but trust me, it's easier if you have an acceptance agent do it for you. Acceptance agents are different from literary agents. My article has a link where you can find one. It's like hiring an income tax consultant--a one-shot thing.

The disadvantage to doing it on your own is that it takes much longer to process your ITIN. The IRS prefers when it's through an agent--less work for them, I guess. Also, if you do not fill out the form correctly, the IRS will deny you and you'll have to start all over.

I highly recommend you find a local acceptance agent and have him submit all your forms. :-)

Keith, you're very welcome. :-)

Cheryl Tardif said...

It appears that Smashwords has a little Google Chrome bug that is preventing anyone using this browser from sending emails via their customer support link at the top of Smashwords.com.

While they work at fixing this issue, if you've had no reply to an email sent to them via Chrome (especially if you're trying to request the letter you need to send the IRS), try using IE for your browser. Then resend your email to Smashwords. IE is working fine.

I'm also working on getting a contact name/email addy for someone at Smashwords who can help international authors with the letter they need for the IRS, to get the ITIN thing going.

Cheryl

Cheryl Tardif said...

One other note: your passport or ID must be notarized in a specific way to validate that you are who you say you are and so that no one can send in fake ID. Don't just photocopy it and mail it in.

Linda Acaster said...

The trick with this stuff is to read ALL the info several times and apply it; no missing lines, no signing in black ink when asked for blue, no thinking "that'll do".

If you are in the UK (and Ireland, I think - check) you can send all your paperwork and your passport Special Delivery to the IRS office in the London Embassy, or you can walk in and have it processed face-to-face, then they will deal on your behalf with the IRS in Austin, Txs.

Several countries have an IRS office attached to their embassy, or deal with European countries around them. Check their websites.

The UK site is http://london.usembassy.gov/irs/index.html

dirtywhitecandy said...

Thank you so much for this, and for your detailed and useful updates. I just called in at the IRS office of the embassy in London, with a letter from Createspace and my passport, and they did the rest. They even filled in the form for me with all the article treaty numbers.

Important point I didn't know - your passport copy has to be notarised by an American. They won't accept even officially notarised copies from any other source. But the US embassy will make a copy and notarise it without charging you - unlike some agencies.

Now I wait - but thank you for your painstaking research. And thank you, Linda Acaster, for pointing me here!

Cheryl Tardif said...

Hi dirtywhitecandy (lol),

Thanks for stopping by. Yes, IRS offices or embassies, I've been told, can notarize your passport. In Canada, an Acceptance Agent is also authorized to do this.

The embassies don't charge but you usually have to make an appointment and there could be a long wait. Something to keep in mind.

Thanks for letting me know how things work in London. Wait, is that London, Ontario, or London, UK? :-)

elenaaitken.com said...

Thanks for pointing me to this blog. Great information!
I'll be launching my book in July so I will definitely be coming back here for advice.
One question, Do you have to get your ISBN number through Smashwords before they'll give you the letter? I've heard that once you get the ISBN through them and you take your book off Smashwords, you can't use the number. Is this true?
I have so much to learn still.

Cheryl Tardif said...

Hi Elena, I'm glad you stopped by.

No, don't buy your ISBN from Smashwords or any other ISBN provider. You don't need to. As a Canadian author, you're entitled to free ISBNs. Ones you'll own.

To register your ISBN, you'll first want to come up with a publishing company name. This could be your name or something creative.

Once you've figured out a publishing name, go to:
CISS and join. It's free too.

Once you're set up with CISS, go to:
ISBN page. You'll first register for a block of numbers with your special publisher prefix. This may take a day or so. Afterwards, you go back to the above page, log in and assign an ISBN to each book you plan to publish.

Keep in mind that you need a separate ISBN for an amazon Kindle ebook being sold using KDP, another # for the Smashwords edition and a 3rd # for a print edition.

Good luck.
Cheryl

elenaaitken.com said...

Another question...
If I get my ISBN number under a publishing company name. Am I in effect creating a company that will have tax implications?
Will I need to file a tax return for the 'publishing company'?
Sorry for so many questions, just want to get it right.
thanks.

Cheryl Tardif said...

As a published author earning an income, you should be filing income tax for a home-based business. Believe me, if you do it right, you won't pay taxes. At least not until you're earning thousands per month. And that takes a while and many books.

You won't file as a separate company but there is a section for In-Home Office expenses. As an author, you'll have many deductions, including a percent of your home utilities paid for your work space/office. Talk to a tax consultant for more info, or join a writers' group. They can help you understand your deductions. I'll also see if I can find one who will write us a guest post.

You will need to claim this income, so be sure to keep gas bills for writing related expenses, phone bills, supply receipts, postage receipts etc.

elenaaitken.com said...

Thanks.
I have a copywriting biz now, so I was thinking of using that name for the publishing. I do need to find a tax expert.
Thanks for the info.

I.A.M. said...

IMPORTANT NOTE: The information above applies to self-published authors. Those who are PUBLISHERS in this situation and are passing royalties on to authors can skip the W-7 form and head right to the W-8BEN step which doesn't involve an Acceptance Agent filing for you. As one of the latter group, I've just saved six weeks and about $650 dollars.

I entirely agree about thew worth of an Acceptance Agent being involved for those authors in this situation, and whole-heartedly endorse the wonder chap at Bluecarp Tax Consulting at 1055 West Hastings Street in Vancouver. He's gem and both knowledgeable and incredibly nice.

Cheryl Tardif said...

Not sure I agree with your comment, I.A.M. The W7 form is to get the ITIN, which you need to submit to Smashwords, Amazon etc so they won't deduct withholding taxes. As far as I know these companies will withhold taxes even if you're a small publisher. It's an IRS thing.

Something publishers should definitely check into. Though I'm now a publisher too, I had my ITINs in place BEFORE I went into publishing.

I'll have an update on this ASAP.

Cheryl Tardif said...

I received confirmation that publishers DO need to apply for an ITIN or EIN.

According to Mark Coker, CEO of Smashwords: "We need a completed W8-BEN form that contains either an IRS-issued ITIN (individuals), EIN (companies) or SSN for folks to receive the tax
treaty benefit."

I.A.M. said...

Well, the guy who acts as a Certifying form guy in Vancouver says that the reason a publisher doesn't need an ITIN (and he didn't mention any other identifying number) is that the publisher isn't receiving 'royalties'. The publisher sends those on to the authors. Yes, there is 'income' for the publisher, but that is taken care of by the Canadian Revenue Agency, and the W-8BEN is the only thing required for someone who is only a publisher and not a self-publisher.

I.A.M. said...

Of additional clarification might be that one's Canadian SIN is sufficient for identification.

I've saved $650 and two hours of the guy's time by not requesting an ITIN. Granted, I'm a non-author operating a registered sole proprietorship, so perhaps that helps.

Cheryl Tardif said...

I.A.M., please read my comment above. I received confirmation from Smashwords that they WILL withhold tax from international publishers if they have not filed for an ITIN/EIN. Authors who have turned publisher can use their existing ITIN.

Any US company that a non-US resident author does business with can withhold tax, usually 30%. It is worth it to get the ITIN.

Cheryl Tardif said...

Acceptance agents are supposed to verify your identity. This means they need picture ID. Again, I highly recommend you go through a professional acceptance agent and do this right the first time.

Otherwise, you may find 30% of your income withheld. Saving $650 may seem like a great idea, but you can have that much withheld from one month's royalties.

Authors and publishers must remember this is a business. You can write off these kinds of expenses (fees for agents). Doing it right the first time will save you a lot of headaches. :-)

I.A.M. said...

The Acceptance Agent I dealt with in Vancouver was the one recommended by the list from the IRS. I made clear to the man I was only a publisher and *not* an author. We did not discuss anything to do with my business registration or anything else. If he wanted to make $640 from me for an ITIN application,l he could have. He says "you don't need one if you're the publisher", then who am I to tell him his business?

I don't want to pick a fight with anyone here, I'm just passing on what he's telling me.

I.A.M. said...

Re-reading things makes me think something of possible clarity. Mr. Coker specifies one of the possible things that are acceptable are the SSN of the person they deal with is fine. Under the tax treaty, the tax will be assessed by Canada Revenue Agency, and your Canadian ID is the Social Insurance Number which is our version of the American SSN. Thus, it'll be fine because they have the cross reference; thus you don't need an ITIN unless you began as an author. Plus you probably have an HST/GST account number, so that covers the import/exportation of things as well. Basically, if you're the *end point* of monies or the portion there of for intellectual property (i.e.: consultation services or the intellectual property of a book) then you need to cover your earning in the USA. As a publisher, you're not doing any of that, because you're splitting things up further to cover internal costs as well as authors and so on. Ergo: no need for the ITIN if *all* you're doing is being a publisher.

Cheryl Tardif said...

Hi I.A.M.,

I really appreciate your comments here and I appreciate that you're relaying what the Acceptance Agent told you.

My point is that Smashwords will withhold 30% of an author or publisher's income, as per Mark Coker's statement to me posted here, UNLESS an author/publisher has and ITIN or EIN or as they say the SSN, which is a new addition. Small publishers can get away with just the ITIN if they have it and are publishing their own works as well as others.

I.A.M., if you have been receiving 100% of your income from Smashwords and Amazon, without providing an ITIN or EIN, I'd be interested to know that. Laws and requirements do change over time. If all Smashwords requires now is a Canadian SIN, that would be great!

My advice to authors and publisher: always check with the retailers/distributors you want to deal with. Whatever THEY want is what you must supply.

Createspace also required an ITIN.

Remember: this is for non-US authors/publishers.

JTR said...

I applied and got over the phone from the IRS an EIN number without having to supply any passport identification. If I understand it correctly an EIN or ITIN are both eqiually valid to qualify for tax exemption. Am I mistaken

Diary of a Creative Black Geek said...

Hello,

Firstly, I found your article to be very helpful. Thank you. I'm new to self publishing and didn't realize how convoluted the tax issue is for Canadian authors.

In regards to The Acceptance Agent issue, I have called around in my area of southern Ontario and these guys are expensive. I'm just a single dad publishing a children's book for the heck of it. Paying upwards of $700 just to send a form to the IRS doesn't make financial sense for me. I looked at the W-7 form and it is quite straight forward to complete. I did it in a few minutes. Thus, my question is: what is the actual benefit of using an Acceptance Agent? Is it simply the processing time? What draw back is there if I just submit the form myself with a copy of my ID?

Also, I wanted to know if there is a chance of reclaiming any of the 30% withheld taxes AFTER the W-8BEN is received from Createspace? Has anyone tried?

Thanks again

Cheryl Tardif said...

Submitting via an Acceptance Agent will ensure you haven't incorrectly filled out the form. It will also be processed much faster by the IRS.

Your other option is to get an EIN. You'll have to google that to get instructions. I've heard this is a bit easier to do on one's own.

I was able to get refunds on all withheld tax, but I can't guarantee this is still the case.

~Cheryl

Cheryl Tardif said...

JTR, you're correct. Either an ITIN or EIN is acceptable. You're the first person I've heard from who has said it's as easy as a phone call to get an EIN. :-) If so, that's awesome for anyone new authors looking for a way to get out of the withholding tax.

Troy Roache said...

Thanks for the article on the ITIN W-7 IRS form, one question though. I’ve looked everywhere but nobody seems to actually say what the Article Number for Canadian writers is? Can you tell me what it is specifically? I’m having trouble knowing which is which on the table. Much appreciated.

Thank you,

Troy Roache

Cheryl Tardif said...

Troy, unless the form has changed from the 2010 form, there is no "Article Number."

There is a "Reason you are submitting Form W-7..." line select h. Then add: "Exception 1(d) Book royalties.

If that's not what you're talking about then I haven't got a clue.

Again, this is why it's best to have an Acceptance Agent. They'll ensure all fields are filled out correctly. OR apply for an EIN. Multiple sources have told me it's a far easier process. Good luck.

Brian Wong said...

For the W-7 Form, in section 6d, it asks you to enter the Date of entry into the United States. What date is this supposed to be?

I currently reside in Canada and publish my books with Smashwords. I travel to the United States occasionally for leisure if that means anything.

Cheryl Tardif said...

Hi Brian,

Thank you for dropping by my blog and for the comments.

It's now much easier to get an EIN by phone via the IRS's toll-free number, (800) 829-4933.

However, if you decide to do the ITIN (both work), then download the instructions for form W-7: http://www.irs.gov/pub/irs-pdf/iw7.pdf

I am guessing you'll leave that field blank. :-)