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Originally Posted by Sunny Day
I'm saying that the IRS is going to demand a W8 or W9 from everybody I pay. You might occasionally get an auditor to accept an alternate letter, but agents work on a quota system to bring in as money as fast as possible.
A foreign entity without a W8 is a huge red flag. The agent will assume the US corp. is funneling money offshore illegally. This means the US corp. and all owners of the US corp. will get full tax audits.
Their choice, a W8 from you, not do business with you or a full audit. Which do you think they will take. At best the IRS agent will demand the US corp. withhold 30% of your payments.
The IRS isn't stupid.
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I understand you want to be careful. And if you own an affiliate program and put in your TOS that all foreign affiliate have to send in their birth certificate, a picture of them holding 12 bananas, a DNA sample, a blood test and a w8 form, then that is your right. Your program, you decide who can join and who can't.
However, if you run an affiliate program and don't have those things in your TOS and after the affiliate has done the work and sent you sales, you refuse to pay him unless he sends in a w8 (as you implied in one of your previous posts) then that would be ripping people off. Even in cases where the w8 forms apply to an affiliate and he doesn't send one in, you still do not have the right to pocket all of his earnings. In that case you withhold 30%, not 100%.
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These alternate letters are an attempt to avoid taxes in your home country.
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That is a serious accusation. Even though I hate taxes, I pay them because I understand the government can make your life hell if you don't. That's why I make sure I have all my docs in order and I make sure I don't make or sign any false statements. By signing a w8ben form I would effectively be stating that I had "US activities" which is not the case.
As always in business, you weigh the risks vs the rewards. It makes sense for a US based affiliate program to document as much as possible. I can fully understand why some programs would demand certain forms. I only hope they realize that they are leaving money on the table when they only accept certain types of documents and refuse other perfectly legal documents because of a misconception. Again, of course it's their decision.
I hope you realize that if an EU based affiliate supplies perfectly legal docs but refuses to sign certain other forms, it's not because he's being an asshole, but because he himself is also looking out for his business.
Ultimately, I'm here to make money. I know people would argue the opposite based on the amount of time I've spent discussing this subject on GFY, but I don't have an unlimited amount of time.
At the end of the day if I have to choose between promoting a small adult program that requires w8 forms that don't apply to my situation or a company that does handle things correctly such as Google, Amazon, Shareasale etc, I know which one to choose.