Last year I published a guest post by UK author Ali Cooper on how self-publishing non-US authors on Amazon (Createspace and Kindle) and Smashwords can reclaim the 30 percent tax otherwise automatically deducted by these US companies.
The post attracted a lot of comment (and still does today). The method set out by Ali is basically sound, but it does involve a lot of hard work with no absolute guarantee of success at the end of it.
In particular, the method involves applying for a US ITIN (Individual Tax Identification Number), for which applicants have to jump through an inordinate number of hurdles, including either visiting the US embassy in person or sending their passport by registered post to America (rather you than me).
Recently, however, word has gone round that a simpler method can work just as well. This involves applying for an EIN (Employer Identification Number) rather than an ITIN.
According to this article on Catherine Ryan Howard's blog, all you have to do to obtain an EIN is phone +1 267 941 1099. This is a direct line to a dedicated IRS unit in Philadelphia that deals with foreign businesses and individuals who need an EIN. A growing number of authors have done this and been issued with an EIN over the phone after answering a few questions.
Catherine's blog has a very helpful, step-by-step guide to the process. One point to note is that to get an EIN you are meant to be running a business, so ideally you will have set up a limited company for your self-publishing operations. Of course, this won't apply to most freelance writers, but thankfully it does appear that the IRS will also accept EIN applications from self-employed writers (as long as they don't live in the US).
My own thought is that it might help if you use a trading name such as XYZ Publishing. You can then describe yourself as John/Jane Doe trading as XYZ Publishing (which is a perfectly legitmate business description).You can explain that you are a sole trader if asked.
The (otherwise excellent) advice given in Catherine's blog post is (in my view) a bit misleading at the end, where she writes, "This will require you to have a company, even if that means just registering as a sole trader." In UK business law anyway, this statement is meaningless. Either you are in business as a (limited) company or a sole trader - you can't be both. It seems to me that as long as you are set up in a businesslike manner, whether as a limited company, partnership or sole trader, you should be OK to apply for a non-US EIN.
It is, as ever, a pity that definitive advice on this is so hard to find, and some of the advice on offer online is contradictory. You might, however, like to check out this topic on my forum, where a number of writers discuss their experiences of going down the EIN route. The good news is that all of them so far appear to have been successful.
Once you have your EIN, it's then just a matter of completing form W8-BEN for each relevant company (Amazon KDP, Smashwords, CreateSpace, Lulu, and so on). Once your form has been received and processed, the companies should stop making deductions from your income and possibly refund any money that was deducted previously.
Good luck, and please do post details of your own experiences below. I'd love to hear if applying for an EIN has worked for you!
Photo Credit: Tax by Phillip on Flickr. Reproduced under Creative Commons Attribution-NoDerivs 2.0 Generic Licence.