February 1946 cover of “Science and Mechanics” magazine with Monorail feature article

This Week's Fish Wrap (№32): A Canadian in the USA Market

“This Week’s Fish Wrap” is an on-​​​​going series of posts summing up the news of the previous seven days in the publishing industry, and appears here each Monday. It’s also quite possible that the posts merely serve as a dumping ground of links so that Atomic Fez Proprietor Ian Alexander Martin can find articles later to include in his occasional rants about how ‘EVERYONE ELSE IS ENTIRELY WRONG’ about various things.

There are many complications in the small press publishing game. As soon as you move objects from one place to another you double those complications. Have those same object cross an international border and you can easily make that an exponential increase. Even with the North American Free Trade Agreement (or ‘NAFTA’) you can still have thing pop-​​up that you hadn’t considered to even exist. For today, let’s limit ourselves to the oddities experienced by a Canadian publisher – let’s call them “me” for easy reference – dealing with the market of the United States of America.

February 1946 cover of “Science and Mechanics” magazine with Monorail feature article
February 1946 cover of “Science and Mechanics” magazine with Monorail feature article

Let’s say that I sell electronic books through the Amazon Kindle Direct Publishing set-​​up. This means that I actually ‘earn’ money through the sales of books in the United States through Amazon.com; as well as the United Kingdom through Amazon.co.uk and in Germany through Amazon.de, but let’s not get too far ahead here). Thus, the USA’s IRS wants to know what’s going on with all of the money changing hands. Here’s a quick explanation of that (thank you, Wikipedia):

The Internal Revenue Service (IRS) is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue. The IRS is responsible for collecting taxes and the interpretation and enforcement of the Internal Revenue Code.

So, in essence, I am collecting revenue inside the USA, and thus the government of that nation wishes its cut of the proceeds. Due to a tax revenue treaty between Canada and the USA, as a Canadian Citizen I will be taxed on that income by the Canadian Government, and not by the American one. The inverse of the situation also applies, should an American person earn monies in the Dominion of Canada; although that situation is far more complicated due to the US Government taxing its citizens no matter where they might earn their income, but again, let’s stick to the topic here.

In order to make everyone aware that there’s nothing untoward going on, it’s necessary to present the IRS with the right bits of paper proving that everything they might want to do isn’t required, as the Canada Revenue Agency will be doing their bit, what with me not actually living in the USA.

Here’s where things start getting complicated, because there’s two different things you need if you’re an author, and only one if you’re a publisher.

SELF-​​PUBLISHING AUTHORS: If you head to THIS ARTICLE, then you’ll get a full set of details, but the relevant bit here is that you need to get a W-​​7 form so as to apply for an Individual Taxpayer Identification Number (or ITIN). This is because you don’t have either an American Social Security Number or a Work Permit, yet you’re earning money in the USA because that’s where the transaction takes place. You’ll also need a letter from one of the firms who sell your books on-​​line, such as Smashwords, Kobo, Createspace, or whoever, saying that they are indeed selling your book(s) in the USA, and that you are a Canadian as far as they know due to a Canadian mailing address or something (you can request one from Smashwords HERE).

There’s a list of Canadian Acceptance Agents HERE, and the W-​​7 form is available HERE. You need to fill in as much of that form as you can (instructions for that are HERE), then head to one of the Agents on the list who will then confirm all your information, then fill in particular bits with specifics such as photocopies of your passport and so on, then you can send the whole lot off to the IRS. This step will cost you money, but getting it done right the first time is obviously worth the cost. If you’re in Vancouver, I highly recommend Bluecarp Tax Consulting Limited at 1055 West Hastings Street in the Guinness Building, as the chap I spoke to there was wonderfully helpful and charming as well. Once he realized I am only a publisher and not an author receiving royalties – and that’s the dividing line here – he took some time to explain what I ought to be doing next, and he waived his hourly consultation fee as I could do all that myself. A sterling fellah.

Now carry on with the next step, as you’re acting as “a publisher” in addition to being an author.

PUBLISHERS: Because you’re not the ‘end point’ of the money, but are dividing it betwixt you and the authors, you get to skip the step above, including the note from someone that the books are being sold in the USA. Hooray!

What both Publishers and Self-​​Published authors have to do is fill in a W-​​8BEN which is – obviously – a Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. This then clarifies to all concerned that Amazon.com doesn’t need to withhold 30% of any monies earned through them, which normally would be done until I had filed a tax return with the IRS. Because I won’t be filing a return with them, but with the Canadian Revenue Agency, there’s no need to hang on to the 30% that would normally be held as being the likely amount of taxation on the US income. Thus, Amazon hands over all of the money, and then I can carry on with my normal Canadian tax forms. Hooray!

You can find a copy of the W-​​8BEN RIGHT HERE, and the instructions for that are RIGHT HERE.

If you’re sending it to Amazon, this is important:

We need to receive a physical copy (paper form) of the W8 that contains a US tax id and that is signed in blue ink. Please put your supplier code/​vendor code in the upper right hand corner and then mail it to the below address. As soon as we receive it, we will update the account and reimburse withholding that has been deducted this year. Note: withholding can only be paid back in the current year it was deducted.

Amazon Digital Services
ATTN: Vendor Maintenance
PO Box 80683
Seattle, WA, 98108 – 0683.

If you’re sending the same things to Smashwords, then HEAD HERE for some instruction.

ADDITIONAL NOTE FOR CANADIAN AUTHORS: Just like the UK authors, you can get in on the “Authors’ Royalties from Library Borrowing for Canadian Authors” programme. Sure, it might not add up to much (especially if the Ford brothers in Toronto get their way with hacking a bunch of libraries out of that city’s system), but there’s not much point in throwing money away to which you’re entitled. Additionally, it proves to the CRA that you really are an author, and thus you are justified in declaring all those expenses of your income. For details on how to get in on that endless river of money, HEAD HERE.

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