Tax Exempt – but Here, Jump Through These Flaming Hoops To Get It

Today, I have mostly spent my day trying to sort out my tax exempt status for Smashwords where I recently put up Dead Heat. The UK is one of those countries to have a tax treaty with the USA – meaning self-published authors like myself can apply for tax exempt status from our American cousins and claim all of the cut from our sales. Hurrah!

But wait, as with anything where tax is concerned, it’s not that simple. It used to be that I could send some documents to the US Embassy in London and get my documents authorised, get my tax number and then send the details to Smashwords so they can remove the 30% cut of my royalties that would have been taken by the IRS.

Not any more.

The IRS closed the London office and there is nobody in my own country who can seemingly authorise any copies of my forms. What’s worse, it used to be that a “non resident alien” could apply over the phone for something called an EAN. This has been replaced too, meaning that the only option is to apply for a I/TIN. Here is what is a deal-breaker for me – it seems now I must send my passport to Texas to get it verified first hand so I can send my authorisation form (the new W8BEN) to Smashwords so they can supply to the IRS to remove the tax status. Of course, I am very concerned about sending my passport to a foreign country – let alone one so far away and let alone meaning it may be out of my hands for several months.

Or simply take my book down from Smashwords altogether because I never had this problem with KDP who had a simple online questionnaire to fill out the W8BEN. 48 hours later, I had my tax exempt status. Considering I intent to pursue small press initially for Salmonweird and use ebooks as a fall back if it doesn’t excite anyone, that might be the least anxious and stressful option – the other alternative is to resign myself to letting the IRS get their grubby little mitts on 30% of my paltry royalties.

Any other UK sellers had this issue with Smashwords? Please bear in mind these changes have been in force since the beginning of the year.

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2 thoughts on “Tax Exempt – but Here, Jump Through These Flaming Hoops To Get It

  1. It’s one of the reasons I didn’t go with Smashwords early on… Their idea of helping UK authors through the process is dire (although Lulu isn’t actually any better in that regard).
    Personally, I pay the 30% US tax and then declare that and that exempts some of my UK tax (and can even lead to a tax rebate).
    Amazon do make it easier, but I wonder why none of these multinationals don’t let us pay tax in our own country? Would it really be so hard to register us to amazon.co.uk (or where ever) instead of .com? It might also let them swerve some of those tax-dodging accusations.

    The entire Indie publishing industry is bleeding cash out to the states in the form of thousands of micropayments every day, because there isn’t even one British platform for indie publishing. I don’t get why one of our publishing houses didn’t embrace self-publishing like the Americans have.

    Or at least I didn’t, until I thought about forming one, and the logistics of it were nightmarish, because the UK government really doesn’t understand how our industry (or the web) works and takes its cues from traditional publishing houses… Hence ebook VAT, which is essentially VAT on information, that isn’t applied if identical information is on paper and they have the audacity to declare not peinting it adds value?! And our rules on what electronic information can be exported are bizarre and archaic, and on first read seemed to imply that it is illegal to include DRM, or deliver the content from a https server (go .gov.uk!).

    It will all be different when I’m in charge 😉

    1. Come the day of the revolution CJ, come the day of the revolution my friend…

      I have sent an email to the ITIN team this evening. It turns out they are open to suggestions to making it easier. Based on engagement so far, I guess they must be aware of the problem. I must say that I feel both the IRS and Smashwords are equally at fault here. The IRS for being shortsighted enough to close their tax office (if we leave the EU – unlikely I know – they might have to open it again) and Smashwords for not being particularly helpful or trying to make things easier for international authors in the way that Amazon have made the process so easy.

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