IRS – Page 2 – Ciaran Laval

January 22, 2014

Tax Cliffhanger – The Conclusion

Recap : Yesterday I blogged about the confusion users were facing with trying to fill in forms to comply with Linden Lab’s new tax and account requirements. At the end of that post I had to leave matters on a cliffhanger, Kat Fetisov was hanging on the telephone with the IRS whilst trying to find out whether she could obtain an Employer ID Number (EIN), which rumour has it can be obtained during a phone call, rather than having to get an Individual Taxpayer Identification Number (ITIN), which can take several weeks to obtain and would therefore mean missing the Linden Lab deadline of 30 days …..

The result, Kat got an EIN! However, there have been more twists to this plot and they may or may not be good, on the face of it they are good. A user called Jerry commented on my original post and said:

“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.”

So Jerry didn’t need to fill in an EIN or an ITIN, and here is where a little guidance may have been useful. Kat has also discovered she didn’t need an EIN or ITIN , for the purposes of filling this form in for Linden Lab. However Kat was advised by Linden Lab that she should put her UK National Insurance number on the form. There is a section on the W8-BEN that has space for a foreign tax ID number.

Kat also has an excellent blog post with some helpful information for those who may be struggling with this : The plot thickens. Or possibly thins a little. However Kat is, rightly in my view, a little suspicious of the way Linden Lab are dealing with matters, it’s not that she thinks Linden Lab have got matters wrong, it’s just that the process is unusual when compared to other American based companies who ask you to fill in forms such as this.

I can see exactly where Kat is coming from on this matter because, as I’ve mentioned before, I’ve had to fill this form in for Amazon KDP and this is how my status there looks:

An Image Should Be Here — Tax Information Completed

As you can see, I have an applicable withholding rate of 30% and that is because I haven’t provided Amazon with an EIN or an ITIN, I’ve left that field blank. This means if I publish anything on Amazon and it sells to Amazon US customers, they will hold back 30% of my royalties. However it looks like, this isn’t the case with Second Life, which should be cheered.

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January 21, 2014

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.

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January 16, 2014

ID Still A Big Challenge In The Digital Age

Another confusing issue with providing information to Linden Lab has reared its head this week, this time in the shape and form of a forum post from a resident who was confused as to why she had received an email from Linden Lab asking for account information and ID.

The reason was soon explained by Linden Lab in the form of a blog post : Required Account Documentation in which Linden Lab announced:

“In addition to required tax documentation (which we blogged about in November 2013), US law separately requires that institutions such as Linden Lab obtain, verify, and record information confirming the identification of account holders who submit a certain volume and/or amount of Process Credit Requests.

We have recently begun emailing users who need to submit this information. If you receive such a notice from us, you will need to follow the instructions and provide the required documentation within thirty (30) days.”

Now ignoring the usual issues such as people finding out and being confused about matters before people have been informed about said issue by Linden Lab, this raises another issue, that of ID in the digital age. The email the user was sent asks for the same forms to be filled in as in the case of those being asked for tax documentation, but the required account information also asks for the following in this particular case:

“In addition to the form itself, we are required to obtain a copy of your government-issued photo identification (ID). The information on the ID must be current (i.e. not expired) and must match the information you submitted on the form.

Please attach a copy of your identification to this Case. The copy must be clearly legible (full color, no smudges or blurs) and must be fully intact (no cut-off portions, no redacted information).

The following are acceptable forms of photo ID:

• Driver’s license
• Military ID card
• Passport
• Any other form of government-issued photo ID

If your photo ID does not display your address, you must also provide us with a copy of a current utility or telephone bill. The name and address to which the bill is addressed must match the photo ID.

In the meantime, it is necessary for us to place a hold on any and all Process Credit Requests for your account until we receive your form and supporting documentation.”

This therefore goes further than the required tax documentation. Why some people are being asked for this is a little cloudy, but it appears to be due to the amount of money or number of times they process credit. This is required by US law so Linden Lab must comply, so Linden Lab are doing their job here. However why do so many different companies need the same information to be submitted over and over and over again in this day and age? This should be less complicated but there are large hurdles in the way.

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November 27, 2013

Questions About New Tax Requirements For Second Life Garners New Information

When Linden Lab recently blogged about new tax requirements people still had several questions regarding many matters relating to those questions. Chief amongst those questions was what exactly a transaction is.

Over at SLUniverse Desmond Shang has posted some details from a response he received from Linden Lab:

“Thank you for contacting us with your concerns. As mentioned in the blog post Required Tax Documentation – Second Life, the reporting criteria for 1099-K is 200+ transactions AND $20,000+ in a calendar year.

Transactions are currently defined as sell orders placed on the LindeX and applies per person not per avatar. How that order is filled does not currently impact the transaction count. For example, if you place a sell order for L$5,000 and that order is matched with three different residents while being filled, it counts as one transaction.

Separately, IRS criteria on withholding taxes is only on the transaction count itself; withholding is only required if we do not have a valid W-9 or W-8BEN on file.”

So that clears up what a transaction is

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November 21, 2013November 21, 2013

Forget PIOF, New Marketplace Merchants Should Provide Tax documentation

Over the last few weeks Linden Lab have announced some changes for account holders. The first, back on November 11th was that new marketplace merchants would be required to put payment info on file before being able to open a store.

The second was more recently, on November 19th Linden Lab blogged about required tax documentation. These issues aren’t linked but I feel they should be and in doing so, Linden Lab would be killing two birds with one stone.

Wait wait wait, the tax documentation is only for those who have gross income of USD$20,000 and make 200 transactions in a calendar year, right? Well not quite, the tax documentation is certainly required if people meet that threshold, but at that point Linden Lab will file a 1099-K with the IRS, the documentation is required for Linden Lab to be able to file a 1099-K, but Linden Lab can ask for this information anyway.

Amazon do this with Kindle Direct Publishing. I haven’t yet published my international best seller and award winning novel, but if I wanted to do that via KDP, I have to fill out a W8-BEN for Amazon to file. The W8-BEN is the non US Citizen equivalent of a W9 form. When I logged into KDP today I saw this:

The missing account information was soon revealed to me after I clicked Update Now:

You may need to squint to read that so I’ll type it:

“Amazon is required by US tax regulations to request information regarding your tax status under US law. Required US tax identification and information has not yet been submitted. Complete your tax information to begin selling on Amazon.”

Let’s just bold that last sentence to emphasise the point: “Complete your tax information to begin selling on Amazon.” So that’s before I’ve sold a single book, before I’m anywhere near 200 transactions, indeed it prevents me from making 1 transaction.

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