Who wants a date with the IRS?

Aussie authors looking to get published in the Amazon Kindle Store, be aware of withholding tax issues. You don't want the IRS to come knocking.

Who wants a date with the IRS?

Getting your ebook into Amazon is easy, right? Yes and no. The ‘no’ part is due to one factor that may not at first be obvious.

Amazon will only pay into US-based bank accounts. Amazon recently announced it will start to pay into non-US bank accounts come the middle of the year. This is great news for indie authors wanting to get their ebooks into the Amazon Kindle Store. In the meantime though, a way of circumventing the problem is to use a third party distributor who will pay directly into a non-US account, most commonly an Australian PayPal account.

But, and here is the kicker, some of these third party services may not collect withholding tax from monies remitted to you. Indeed, I am aware of one that has a business model based upon the non-payment of withholding taxes. Amazon, on the other hand, has always been straight up about withholding tax obligations with us and we don’t imagine this is about to change.

If you’re not familiar with international trade you might be asking, ‘withholding what’? Wikipedia has a good article on withholding tax if you’re interested.

You might also be asking, ‘so what’?

If your ebook sales total a few dollars, it really isn’t likely to be an issue, unless the US Internal Revenue Service (IRS) conducts a random audit. If, however, you receive royalties in the thousands of dollars, you could have a problem. For most people in the States, a date with the IRS isn’t one they’d especially like to add to their calendar.

I don’t have legal or accounting expertise and we’re not offering any such advice. But encourage every author engaged in international trade to be aware of withholding tax issues.

Red Hill Digital – our digital distribution business – has license agreements with a US entity that is majority owned by Red Hill Publishing’s parent company, Acute Communication P/L. Red Hill Publishing LLC (a Delaware LLC) fully complies with its tax obligations in the United States. This means our distribution clients don’t need to worry about filling multiple withholding tax related forms every time they open an account with an ebook retailer. Ebooks made easy!