{"id":3404,"date":"2013-11-21T18:23:22","date_gmt":"2013-11-21T18:23:22","guid":{"rendered":"http:\/\/sl.governormarley.com\/?p=3404"},"modified":"2013-11-21T18:38:57","modified_gmt":"2013-11-21T18:38:57","slug":"forget-piof-new-marketplace-merchants-should-provide-tax-documentation","status":"publish","type":"post","link":"https:\/\/sl.governormarley.com\/?p=3404","title":{"rendered":"Forget PIOF, New Marketplace Merchants Should Provide Tax documentation"},"content":{"rendered":"

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<\/a>.<\/p>\n

The second was more recently, on November 19th Linden Lab blogged about required tax documentation<\/a>. 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.<\/p>\n

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.<\/p>\n

Amazon do this with Kindle Direct Publishing<\/a>. 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:<\/p>\n

\"An<\/a>
Tax Information Incomplete<\/figcaption><\/figure>\n

The missing account information was soon revealed to me after I clicked Update Now:<\/p>\n

\"An<\/a>
Update tax Information<\/figcaption><\/figure>\n

You may need to squint to read that so I’ll type it:<\/p>\n

“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.<\/em>”<\/p>\n

Let’s just bold that last sentence to emphasise the point: “Complete your tax information to begin selling on Amazon.<\/strong>” 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.<\/p>\n

<\/p>\n

This is where I think Linden Lab may have missed a trick. If Amazon can request this information from potential merchants, why can’t Linden Lab? Personally I think this is better than asking for payment information to be put on file, a potential fraudster is now not just deceiving Linden Lab, they’d also be defrauding the IRS, which is a pretty damn serious offence. There are potential legal penalties for falsifying this information so there’s some oomph to it.<\/p>\n

The information I filled in led me to the W8-BEN form, as I’m not a US citizen. This is the same form that some non US citizens will be filing for Second Life anyway. After filling in the form online, my account was updated:<\/p>\n

\"An<\/a>
Tax Information Completed<\/figcaption><\/figure>\n

If you need to update any information you can go back and update the form. I haven’t got a tax information number for non US citizens, you can apply for one and it slows down the process but it should mean you can reduce the withholding rate of 30%, that’s something I need to look into but the form in its basic format does not take long to fill in.<\/p>\n

Tying this to the new Marketplace requirement would have definitely helped Linden Lab in collecting information and placing a barrier in front of the fly by nights. I also think it may be useful to allow people to enter this information voluntarily to their account, no matter what their account status. Some people will happily provide such information and by making it voluntary Linden Lab can break people into the habit gently, so that if they ever do find themselves in a situation whereby they really need anyone who sells on the Marketplace or LindeX to provide this information, people in the community will be able to answer questions in the forums about it.<\/p>\n

There are still a few questions regarding the new tax documentation policy, as exemplified in this forum post: New tax Policy??<\/a>\u00a0 One question I’ve seen raised more than once is what exactly a transaction entails. People don’t know whether it’s a cash out, a sale on the LindeX or a combination. This is something that Linden Lab really should clarify. When I filled the form out on Amazon there were guidance notes and links to useful information, Linden Lab should follow Amazon’s lead here, of course it’s a bit more straight forward to understand what a transaction is on Amazon.<\/p>\n

Overall people shouldn’t be worried about providing this information, it’s a legal requirement in some circumstances and filing the information just makes the process flow more easily if you do reach those thresholds.<\/p>\n

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