[UPDATE: Please make sure to read the comments on this post too, as fellow Irish self-publisher David Gaughran explains how he got his EIN—in minutes.]
[UPDATE #2: Author Melissa Hill advises me that Irish residents might be better off contacting the US Embassy in London. I guess it doesn't matter which embassy you contact anyway, but it seems that London is better equipped to deal with these kinds of applications/enquiries than the Dublin one is.]
[UPDATE #3: Commenter Janet advises that starting this year, new IRS rules will mean that companies such as CreateSpace, etc. WON'T be able to refund withholdings from the current year. That will mean that any monies withheld will go straight to the IRS, and you'll have to apply to them to get the refund. If getting an EIN/ITIN is rocket science, filing tax returns with the IRS when you don't live in the US is string theory and chaos theory combined; my advice would be to get your EIN or ITIN before you're due a single royalty cheque, if possible.]
You may recall that before Christmas I posted about the saga of obtaining a US Individual Tax Identification Number (ITIN) so that I could receive my royalty cheques from the likes of Amazon, CreateSpace and Smashwords without them withholding 30% from me, which is what they’re obligated by law to do if there’s no tax information provided. Since then there’s been a couple of comments left on the post saying that self-published authors outside the US don’t need an ITIN, only an Employer Identification Number (EIN), and EINs are far, far easier to get.
I’m certain this is true, not only because of the commentors but because I know writers who aren’t self-published who use it for things like getting paid for features from US publications. I’m not an expert but this is the way I think it works:
An ITIN is for earning royalties in the US as a non-US resident. Let’s say you were published in the US by Penguin Books, for example. Other companies are distributing the book to stores and websites, and Penguin are collecting the money because the book is their product, and you’re entitled to royalties from each sale. To get paid them, you need an ITIN. But with a self-published book, the product is yours. Amazon KDP, CreateSpace and Smashwords are just distributing it and then paying you; there’s no middle man, no entity in between who can claim it’s their product. The royalties are really just profits. Thus you are just doing business in the US. You’re just selling a product. And in order to get your 100% instead of seventy, you merely need an EIN.
So how do you get an EIN? You can apply online at the IRS website, although it’s a “live” application service and so can only be used during certain times of the day (specified on the site). You also apparently have the option of phoning your nearest US Embassy where you might end up with your EIN before you hang up the phone.
You may have to, ahem, pretend that at some stage in the future you might take on some staff…
(Well, when you start selling a gazillion e-books a second, you are going to need an assistant, right?)
What if you have an ITIN? Well, like me, you’ve just done some form filling and IRS-stressing you didn’t really have to, but hey, it’s done now. It’s not wrong to have an ITIN, it’s just you could have got an EIN instead. The people who know this seem to be freaking out all over the interweb, leaving excitable public service announcements on other people’s blogs to alert them, and while I love when useful information is shared, I don’t really see the need for a full-on freak out about this. Getting an ITIN is not difficult—what is difficult is trying to do it with the information the IRS provide, and you don’t have to because plenty of self-published authors have blogged about how they got theirs. (Including me.) Plus, whenever you get your number, be it an ITIN or EIN, you get refunded all your withholdings from the year to date, so waiting a few weeks isn’t going to make a difference unless it pushes you into a new calender year. My point is, calm down.
If you have an ITIN, you shouldn’t even be reading this because your tax situation is already sorted. (But of course I’m glad that you’re here!)
If you’re in the processing of applying for it, just wait. You’ll get all your money back anyway.
But if you haven’t started the process at all, get on the phone to your nearest US Embassy or follow the link to the online application, and then come back and tell me how you got on.