Pub Rants

Tagged foreign author clients

God Bless International Tax Attorneys

STATUS: I’m generally annoyed but can’t really talk much about why. Maybe later. In good news though, Ally Carter is still on the NYT list. Yahoo! CROSS MY HEART has been on for 8 weeks and is at #6. I’D TELL YOU I LOVE YOU has now been on for 3 weeks and we’re holding on to the #2 spot. Now that never fails to bring a smile to my face.

What’s playing on the iPod right now? THE BIG SKY by Kate Bush

IRS—that should sum up my day. Do you know what I did this week? I paid a nice hefty sum to my International tax attorney to write me up a memo that clearly outlines what the agency’s responsibilities are for tax withholding and reporting for my clients who are citizens of Australia, Ireland, and Canada.

This is something that should be accomplished via a free phone call to the IRS but after the fourth transfer and conflicting answers (see previous blog about this), I decided it was worth the money to confirm the letter of the law from an expert (and no, that would not be an IRS representative).

I have to say that Cara, the International Tax Attorney, is my new best friend. The minute I asked her my questions, it was clear that I was not speaking in a foreign language and she knew exactly what I was talking about. Such a pleasant experience.

This was a fifteen page memo that I’m really not going to sum up in one blog entry but I can hit on the high points.

And folks, I’m just sharing this for fun. This in no way substitutes for tax advice from a professional and should not be considered so.

1. Ascertain the foreign author’s country of permanent residence and whether they are a citizen there.

2. Check the tax treaty for specifics on what is the withholding percentage allowed as well as what type of royalty income is covered by the treaty. (For example, Ireland has 0% withholding on everything. Canada is also 0% withholding except for royalties earned from film/tv. Such fun to keep this all straight.)

3. Have foreign author complete W7 form for an ITIN (international tax id number) which will be needed for the W8BEN form which must be on file.

4. Have foreign author fill out the W8BEN form correctly. If they don’t, agency must withhold 30% for U.S. taxes regardless of what the tax treaty says (so this is crucial)

5. Report to the IRS amount withheld or not withheld on form 1042-S. If withholding was done, monies need to be sent to the IRS at a specific time and with a whole other form. The IRS can’t tell you what you actually need to do but woe is you if you don’t get it there in time.

So basically what I’m saying is that I’m good to go with any foreign author clients from Australia, Ireland, and Canada so query away.

If you are a non-US citizen and resident of somewhere else, it’s back to Cara and a whole new memo…and no, that wouldn’t keep me from taking you on but I’d have to especially love your manuscript to take on the trouble.