Why is tax so taxing?

Having sold rather a lot of ebooks last month via Amazon.com, my US sales figures are – for the first time – remarkably healthy. However, nothing is ever easy and sales from outside the UK (as opposed to sales to outside the UK) are treated differently for tax purposes. Because I am selling from a US-based site, I become liable to US tax. Fair enough – I have no problem with that. Death and taxes are the only certainties in life, as somebody said (who was it?).

Amazon withholds a percentage of my profits to fulfil tax liabilities. It is up to me to prove to the IRS that I am not a US citizen. Again, I have no problem with this and I can then declare the US income on my UK tax return together with my UK sales. So I have found my way around the IRS website, downloaded the form I need to get a foreign-national tax number (ITIN), found the tax-treaty article number etc etc. It’s all ready to send off to the US embassy in London with my passport. The only thing I need is a letter from Amazon to confirm I have made sales from their site.

So I email Amazon. They can’t help me. They are still discussing legal requirements with the IRS. So they won’t give me my money and yet they won’t provide me with the documentation I need to claim it back correctly. Doesn’t seem right to me. The other ebook retail site – Smashwords – issues these letters automatically once sales reach a certain threshold. But hardly anybody seems to buy ebooks via Smashwords.

But things have changed a bit. The help texts on Amazon.com have changed and there is a draft letter there which you can apparently now use for tax purposes. But it says it needs to be on headed paper – how can I do that? I can only download it and print it, which makes it a copy and the IRS don’t accept copies. I email Amazon again – they apologise for giving me the wrong answer last time and yes, I can use this letter but they haven’t received approval for it from the IRS. And in any case, it’ll still be a copy, won’t it? There are discussions in the forums by people who’ve had the IRS reject their tax forms because the letters were copies. I give up. If anyone has had success, please let me know what you submitted.

So - in an attempt to get enough money in my Smashwords account to get a US tax letter from them, I'm offering a BOGOFF on any of my 3 books for a limited time only. Buy one via smashwords (they're not exactly expensive) and let me know and I'll send you a coupon for a **free** one of your choice.

This offer will end once I hit my target sales on smashwords.

The Power of Advertising

I published my first ebook Hamelin's Child in February this year.By March, I was thinking of having a play with advertising and I paid for a small slot on a large-ish review site - I think the ad came and went a few weeks later with no noticeable increase in sales. I wondered whether it was a waste of money, but thought I'd try once more. So I picked Ereader News Today and paid for a book-of-the-day sponsorship. It cost me $25, but it doesn't seem much when you convert it to sterling. Got an email saying the next slot was October and I promptly forgot about it.

The ad went live yesterday (26th October). Not sure what time as it's a US site. I came home from work early as I was going out to the theatre that night and logged on about 3.30pm to nothing much. By 4pm, I'd sold over 100 books on amazon.com and by late that evening I'd sold over 300.

Amazon.com
#180 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
#45 in Books > Mystery & Thrillers > Thrillers
#53 in Kindle Store > Kindle eBooks > Fiction > Genre Fiction > Mystery & Thrillers

Probably the highest ranking I'll ever see, but there it is. Sales are still trickling in more than 24 hours later and I'm hoping that I'll get more from sample downloads that convert to sales.

Trouble is, amazon.com has decreed itself the custodian of my US tax liability. Until I can get a foreign-national US tax id, amazon keep 30% of my earnings against tax. To get a tax id, I have to get a letter proving sales. Can I get one out of amazon? No - they are still talking with the IRS  about what is legally acceptable (despite the fact that other UK authors have got letters out of them). Whereas the other US ebook distributor smashwords apparently automatically sends out tax letters once sales reach a threshold.

So if you have the urge to buy one of my books, please go to smashwords instead of amazon. That way I can get all of my money back from amazon instead of letting them keep it for the IRS!

Update 3rd November -  I reckon I've sold close on 450 ebooks as a direct result of one advert and they are still trickling in slowly.