LL’s New Account Requirements Prove Taxing For Users

Whether it’s Required Account Documentation, or whether it’s Required Tax Documentation, SL users are getting into a tizzy with LL, the IRS and confusion about whether they need an ITIN or an EIN as people find themselves lost in acronym city.

There are posts on the official Second Life Forums:

ID and TAX ID Information Required by Linden Labs – Pending Processes Credits On Hold

Patriot Act Letter from LL?

LL needs more “Required Account Documentation” ?…..

The people starting these threads are not noobs, some of them have experience outside of Second Life of dealing with business issues, yet they are lost in a sea of fog as to exactly what’s required and why it’s required. Then over at SLUniverse there is a long standing thread where Kat Fetisov is currently hanging on the telephone with the IRS! Will the call be finished before this blog post is published? Hold tight readers, we may need to end with a cliffhanger …..

However there are some things that people need to know regarding these issues, one of them being that if you’ve been under the radar with your income from Second Life, you may be in for a bit of pain …. and really, it’s your own fault and you know it really, so concentrate and find out the proper options. Unfortunately, as I said earlier, the current options are shrouded in mist.

Now one point of confusion regarding this new required information is with regards to what happens if people don’t fill in their forms within 30 days. One reason people may not fill the form in within 30 days is that they haven’t got all the required information. Now a sticking point seems to be withholding, which Linden Lab are withholding information about it seems, all they say in one post is:

If you reach the transaction threshold and we do not have your completed and signed W-9 or W-8BEN on file, we are required to withhold funds from your account (at the current rate of 28% of your gross amounts received).

What’s confusing about that you may wonder? Fill the damn form in, however the confusing part, which is going to be more of an issue for non US residents, is that in order to avoid withholding in many cases, you need an Employer ID Number (EIN) or an Individual Taxpayer Identification Number (ITIN). Now if people need an ITIN, they aren’t getting one in 30 days, they take months to obtain. However EIN’s may be available over the phone.

The thing is, you can leave this section of a W8-BEN form empty (if you’re not a US resident, if you are you should be filling in a W9). Now on Amazon Kindle Direct Publishing, if you leave this field empty, Amazon will withhold 30% of your royalties on sales from Amazon US and some other international Amazon sites, but they won’t withhold royalties for sales on European Amazon sites, presuming you’re from Europe.

So far Linden Lab have not indicated what the situation is if people fill in the required information but don’t provide an EIN or ITIN. Will they still be subject to 28% withholding? Maybe Linden Lab don’t know themselves, after all, this is all new, but a little bit of guidance here would not go amiss because some people feel they won’t be able to fill the form in without an ITIN, therefore they assume they won’t make LL’s deadline of 30 days, but then they don’t know whether all their processing of credit will be on hold, confused?

The thing to do is not to panic, here’s an example of someone who went through this process for Amazon KDP:

Non-US Self-Publisher? Tax Issues Don’t Need to be Taxing

Now the above link is about Amazon, not Second Life and from Amazon KDP you get royalties, which may be a very different scenario to what’s paid from Second Life. However, the process in terms of getting an EIN should hopefully be similar. As I said earlier, on Amazon KDP you don’t need an EIN or ITIN to complete the form, but on Amazon KDP you can update the form and add that information later, I don’t know if you can do that with Second Life.

Alas Kat still seems to be on the phone, so I don’t know how she got on! So I will have to end this on a cliffhanger …….

3 Replies to “LL’s New Account Requirements Prove Taxing For Users”

  1. Thank you so much for all this information. LL won’t help a bit. When I simply asked whether they need an ITIN, they just told me that it is not their job to consult me and I have to get an official taxlawyer (Yeah, and he would cost me 10 times what I make in SL). So, I am from Europe. Here is what I did. The Lindens sent me a message through the support system. That means I didn’t get an E-Mail. I tried to transfer some money and it did never arrive within 3 weeks. So I filed a support ticket. That is how I found out that there was an open ticket where they requested the tax form. I filled it out and I got my money, but as you said, I left the ITIN blank. Still, one month later I sent another payment and it worked.

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