New Tax policy??

[Madeliefste Oh]

I didn't receive an email. I don't make more then 20.000 US$ a year, and I have only 12 cash outs a year. So I did not except to hear anything about it anymore. But today I got a ticket. I have to submit one of these forms as well, because I have more then 200 transactions on the Lindex. And that is very well possible, since I sell my L$ almost daily, so I don't have to wait for buyers at the end of the month.

Question about non US citizens

I pay in my own country two sort of taxes, income tax and VAT. My SL income is subject to tax in my own country. So I already pay my income tax. With VAT it is different, I have to pay VAT for services and sales in my own country, not for sales made in USA.

How is this paperwork with the IRS going to work out? How do non US citizens avoid to pay taxes double, in both countries? (My country has tax treaty with USA).

Anyone with any knowledge about this around?

[Knowl Paine]

You are a citizen of a Sovereign Nation. You are not obliged to respond to any communications from the IRS.

Much of the information in the link, defines obligations set upon LL.

It basically says that if you don't want to jump through the systems fictitious contractual hoops, there's a flat fee of 28% on amounts above stated limit. (If you're making that much, you might get rich, so we need to tax you)

 

 

   

[Starfire Desade]

Just curious trying to read through what was said... it appears it is $20,000US in Linden sales, not in cash outs.  LL doesn't attempt to track your business expenses, just the gross sales.  Of course, as with all of us having to specualte, this may be incorrect.

[Pamela Galli]

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Starfire Desade wrote:

Just curious trying to read through what was said... it appears it is $20,000US in Linden sales, not in cash outs.  LL doesn't attempt to track your business expenses, just the gross sales.  Of course, as with all of us having to specualte, this may be incorrect.

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This is the question. What transactions do they mean?  How would they know the difference between a sale and someone just giving me money?  

[Madeliefste Oh]

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Knowl Paine wrote:

 

It basically says that if you don't want to jump through the systems fictitious contractual hoops, there's a flat fee of 28% on amounts above stated limit. (If you're making that much, you might get rich, so we need to tax you)

   

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That is not what Linden Lab has let me know, they wrote: "Your paperwork must be submitted within 30 days, and any pending process credit requests will be held until receipt of your form."

I won't be able to manage it in 30 days anyway, because before I can complete that form I must apply for a US tax payer identification number. It will take 6 to 8 weeks before I get one.

So it looks like I won't be able to withdraw any of my money till half or end of January.

 

[Mikki Miles]

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Madeliefste Oh wrote:

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 before I can complete that form I must apply for a US tax payer identification number. It will take 6 to 8 weeks before I get one.

So it looks like I won't be able to withdraw any of my money till half or end of January.

 

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I'm not sure about that. on top of the form is stated: 

"Fill out any required field

You need to sign in 2 locations and fill out 8 mandatory fields"

those mandatory fields are your Name and adress only, so, my understanding is, everything that's not mandatory is NOT required (for now)

[Theresa Tennyson]

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Madeliefste Oh wrote:

I didn't receive an email. I don't make more then 20.000 US$ a year, and I have only 12 cash outs a year. So I did not except to hear anything about it anymore. But today I got a ticket. I have to submit one of these forms as well, because I have more then 200 transactions on the Lindex. And that is very well possible, since I sell my L$ almost daily, so I don't have to wait for buyers at the end of the month.

Question about non US citizens

 

I pay in my own country two sort of taxes, income tax and VAT. My SL income is subject to tax in my own country. So I already pay my income tax. With VAT it is different, I have to pay VAT for services and sales in my own country, not for sales made in USA.

How is this paperwork with the IRS going to work out? How do non US citizens avoid to pay taxes double, in both countries? (My country has tax treaty with USA).

 

Anyone with any knowledge about this around?

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The reason for the paperwork you're being asked for is so that Linden Lab and the IRS know you are a resident of a country with a tax treaty with the US so you won't have to pay double tax.

[Madeliefste Oh]

I don't know if I'm free to choose where to pay tax, in USA or in my own country. At first glance it looks like I should have to pay 15% tax over my SL income according to tax rates 2013 in USA, while in my own country I have to pay minimum 37%. It will lower my tax costs more then half when I can pay in USA. (Plus I can pay directly in US$ and won't loose money with the expensive exchange rates from Paypal). On the other hand I might miss some advantages in my countries tax system with doing so. Or maybe its not even legal, and is it only possible to pay in my own country. 

I'm going to find an accountant from my own country with experience in both tax systems to advice me in this. I simply lack too much knowlegde to make a clever decision about this matter

 

 

[Madeliefste Oh]

The tax party I had in mind in over already. Because I'm located here the only option I have is to pay tax in my own country.

So it looks like nothing will change for foreign people who already pay tax in their own countries. Only thing is you need to do some paperwork to satisfy the IRS.

[Gooden Uggla]

On the w-9 form where they want the TIN number, just write "applied for TIN" and when you get it from the IRS, send the Lab a ticket requesting your TIN niumber be added to your w-9 form. You'll be able to cash out for 60 days without a TIN.

[Perrie Juran]

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Gooden Uggla wrote:

On the w-9 form where they want the TIN number, just write "applied for TIN" and when you get it from the IRS, send the Lab a ticket requesting your TIN niumber be added to your w-9 form. You'll be able to cash out for 60 days without a TIN.

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Where did you get this information?

[Madeliefste Oh]

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Gooden Uggla wrote:

On the w-9 form where they want the TIN number, just write "applied for TIN" and when you get it from the IRS, send the Lab a ticket requesting your TIN niumber be added to your w-9 form. You'll be able to cash out for 60 days without a TIN.

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That might be so for US citizens, but foreigners must use the W-8BEN form.

 

[Knowl Paine]

Did you get, or discover an email from LL after your last post? You stated that you did not receive an email from LL.

My comment may have been more of a political statement, rather than a logical approach to your original inquiry. Sorry about that.

As you have stated in later post in this thread, you should consider seeking a legal, or tax professional, for advice.

 

 

[Madeliefste Oh]

The only thing SL has send me is the ticket. I replied that and asked what happens when I don't reply within 30 days, because I forsee I'm not going to make it. No answer so far, neither by ticket or mail.

I'm member of a discussion board for innovatie entrepeneurs in my country. Some of them have to do with both tax systems as well, like people who sell at ebay or at google play. They told me they had to send in this application for a US tax indentification number first (form SS-4), and wait for that number to arrive before they could complete the W-8BEN form.

A professional tax advisor told me it is not possible to choose for yourself under which tax system you will be taxed. Basicly you are taxed in the country you operate from.
But then he asked further about my specific situation and I explained that I'm active in a platform where is paid with virtual money, and there is new regulation in US for virtual money traders. Thus the business that hosts the platform had to register as a financial institute, because of the virtual money. And now we have to do with all this regulation and paperwork from the IRS.

And then he didn't know anymore. (This happens often when I speak to an advisor, as soon as I go into detail about my situation in SL, those skilled men who seem to have an answer on any question that comes up, suddenly fall quiet and scratch their head.) In this situation it might still be possible that the IRS claims tax... It's just a matter of sending in the form and wait for a decision.

 

 

 

 

[Madeliefste Oh]

I got a reply from LL (by ticket) about my question regarding the 30 days limit.

They told me an EIN is optional, not required. When my EIN arrives I can update the W-8BEN form, by sending in a new one that includes the EIN number. 

I'm done for now. Form W-8BEN is sent.

[Gooden Uggla]

One of the most interesting facts I've received is that the Lab was supposed to start notifying US residents 2 years ago to expect this new tax rule to take effect in 2013, yet the Lab waited until 45 days from the deadline to notify the effected residents.

We don't even have the chance to change our lindex usage patterns  to fall beneath the reporting guidelines because the Lab chose not to follow the IRS policy. That's the part that galls me the most, I could have easily sold on the lindex less than 16 times a month, but I was never given the chance.

The collossal incompetence is stunning in it's immensity.

[Gooden Uggla]

Scroll down to "TIN Applied for" http://www.irs.gov/pub/irs-pdf/iw9.pdf

[Perrie Juran]

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Gooden Uggla wrote:

Scroll down to "TIN Applied for"

http://www.irs.gov/pub/irs-pdf/iw9.pdf

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"TIN Applied for

For interest and dividend payments and certain payments with respect to readily tradable instruments, the payee may return a properly completed, signed Form W-9 to you with “Applied For” written in Part I. This is an “awaiting-TIN” certificate. The payee has 60 calendar days, from the date you receive this certificate, to provide a TIN. If you do not receive the payee's TIN at that time, you must begin backup withholding on payments.

Reserve rule. You must backup withhold on any reportable payments made during the 60-day period if a payee withdraws more than $500 at one time, unless the payee reserves an amount equal to the current year's backup withholding rate on all reportable payments made to the account."

 

This assumes that LL is smart enough to do/program this in their Payment system. 

[Gooden Uggla]

No kidding...

[douglasquad]

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Gooden Uggla wrote:

One of the most interesting facts I've received is that the Lab was supposed to start notifying US residents

2 years ago

to expect this new tax rule to take effect in 2013, yet the Lab waited until 45 days from the deadline to notify the effected residents.

We don't even have the chance to change our lindex usage patterns  to fall beneath the reporting guidelines because the Lab chose not to follow the IRS policy. That's the part that galls me the most, I could have easily sold on the lindex less than 16 times a month, but I was never given the chance.

The collossal incompetence is stunning in it's immensity.

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So you just need to make under 16 lindex transactions a month to stay under the radar?

What other stats does the lab use to see if you fall under the reporting guidelines? Do they track your marketplace earnings for an example?

[LepreKhaun]

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Gooden Uggla wrote:

One of the most interesting facts I've received is that the Lab was supposed to start notifying US residents

2 years ago

to expect this new tax rule to take effect in 2013, yet the Lab waited until 45 days from the deadline to notify the effected residents.

We don't even have the chance to change our lindex usage patterns  to fall beneath the reporting guidelines because the Lab chose not to follow the IRS policy. That's the part that galls me the most, I could have easily sold on the lindex less than 16 times a month, but I was never given the chance.

The collossal incompetence is stunning in it's immensity.

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I have no idea of what "source" of your "interesting facts" are. Please cite any reference you might have for any and all references to a "so-called obligation" as you (feebly) allude to.

 

I mean, it's great you have all these messages from "somewhere", but could the rest of us at least read them as well? 

[Pamela Galli]

I dont know what LL was told, but this is from 2010 re Paypal:

 

http://www.ecommercebytes.com/C/abblog/blog.pl?/pl/2010/12/1292896600.html

[Perrie Juran]

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Pamela Galli wrote:

I dont know what LL was told, but this is from 2010 re Paypal:

 

http://www.ecommercebytes.com/C/abblog/blog.pl?/pl/2010/12/1292896600.html

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Unless LL says all we can do is speculate.  Perhaps because cash outs are done through PayPal who does report the money, LL didn't think they needed to do this. 

It's one of those things where good communications from LL would go a long way toward good customer relations.  It remains beyond many of our comprehensions why they don't get this.

It's not uncommon for a business or an individual to ask the IRS what they need to do to comply or if a tax rule appplied to them.  Again, complete speculation on my part, but they could have gotten a letter telling them, "You've got 30 days to get in compliance."

Maybe one day we will understand why LL chooses silence over communication.

[Charlotte Bartlett]

Personally, I suspect as  Linden Research Inc is now a bona fide Financial Institution due to their MSB status - this is just the start of the enhanced reporting/goverance those cashing out will see.  Not a bad thing imho - but timing / implementation is going to be key for them. 

[Flew Voom]

I have received a ticket from LL as well where they ask for a copy of my ID, my social security number etc.  I have a verified paypal account, they already have all the info and any goverment can ask paypal for all my transactions. And according to my goverment I am not obligated at all to provide a private company my ID. And specially knowing that LL hires and fires employees on the go I am absolutely not willing to hand out my ID card to LL and risk identity theft, because I have zero insight in who at LL have access to my ID, I don't see any clausule how my ID copy is being stored and protected by LL.