WP7 Marketplace Signup help for Aussies Part 2 (getting a US ITIN)
This entry is a follow up to my original post WP7 Marketplace Signup Help for Aussies (Bank Info + More) – and explains how to get a US ITIN (Individual Taxpayer Identification Number)– which is the US equivalent of an Australian Tax File Number.
The ITIN will ensure you don’t have to forgo a whopping 30% withholding tax on Windows Phone 7 Marketplace payouts – which in conjunction with Microsoft’s 30% commission would ensure you only see a very small percentage of your sales revenue.
I’ve written this guide as most developers (like me) find that their brains turn to jelly when having to deal with complex accounting stuff (after all we write code, we don’t count beans). I found this entire process utterly confusing – particularly finding out how to fill in the W7 correctly for the purposes of getting marketplace payouts (as it’s designed for all manner of reasons for getting an ITIN). Hopefully this post saves you some of this drama.
Note that most of the below information also applies to WP7 developers in other non-US countries (although note that some fields like treaty numbers and offices etc will be different) – so you can use this as a starting point if you’re somewhere else.
Note that in some cases I believe you can alternatively apply for a EIN instead (which is much simpler and can be issued over the phone) – my understanding is that an EIN is only available to fully incorporated Australian companies where you have a payroll/staff – and not available to Sole Traders (Individuals). If you think you may be eligible for an EIN – please contact the IRS directly on their hotline and see if it flies.
Also – if you want to get an ITIN – it’s recommended you do so prior to submitting your W8-BEN form (the document you need to submit to Microsoft Marketplace Commerce team) – as you can then provide your final ITIN number on the W8-BEN. However – it is possible to submit a W8-BEN twice – once before you have your ITIN and then again once you have been issued it (keeping in mind you may need to request no payments are made initially – or you will need to fill in a bunch of other documents to get your withholding taxes credited back to you). You can also just forgo this 30% and not get an ITIN (but probably not a great idea).
What you need to submit to the IRS to get your ITIN
In a nutshell – applying for a ITIN requires that the following three documents are sent to the IRS -
- A W-7 Form (see below for detailed information on how to do this).
- A Notarized Passport Document (which is essentially a photocopy of your passport with a special Apostile mark from the Australian Department of Foreign Affairs and Trade).
- The Microsoft Letter – which is the letter provided by Microsoft stating the reason why you need your ITIN. (Note that problems exist with this step – see below for more information).
Please see below for notes on how to get and submit each of these documents..
Document #1 – Obtaining and Completing the ‘W-7’ Form
You will first need to download the PDF version of the W-7 form from the IRS at the following link : Application for IRS Individual Taxpayer Identification Number
A step by step guide is also available at http://www.irs.gov/pub/irs-pdf/iw7.pdf – however note that this is a very generic guide for everyone who may apply (not just WP7 developers) – so see the information below for how Windows Phone 7 developers should be handling this form.
The steps below refer to questions which appear on this W-7 Form :
In the section at the top of the page “Reason you submitting Form W-7” :
Tick Option a. (Nonresident Alien required to get ITIN to claim tax treaty benefit).
Tick Option h. (Other)
For this option – you need to enter three values :
- Reason/First Field : “Exception 1(d) – Royalty Income”
- Treaty Country : “Australia”
- Treaty Article Number : “12”
NB: If you are not Australian – you can find the appropriate treaty document on the IRS site – the link to the Australian one is found at http://www.irs.gov/businesses/international/article/0,,id=169499,00.html – so you’ll need to find the one for your country and determine the correct article number (this is the one titled ‘Royalties’.)
Entering your general Details (Questions 1 – 4)
This is pretty straight forward – simply enter your appropriate full name and address here. You can provide alternate mailing address (3) as well as any alternate names (ie. maiden name) in (1b).
Entering the ‘Other Information’ (Questions 6)
These questions are also fairly straight forward – below is some example answers -
- 6a. Country(ies) of Citizenship : “Australia”
- 6b. Foreign Tax ID Number : <Enter Australian TFN> and put “(AU TFN)” afterwards
- 6c. Type of US Visa : “n/a” (assuming you aren’t living in the US)
- 6d. Identification Document Supplied : Tick Passport, Enter Passport Number/Exp Date.
- 6d. (cont) : Enter ‘Australia’ for “Issued By:” part.
- 6d. (cont) : Enter ‘n/a’ for ‘Entry Date in United States’ question.
- 6e. Have you previously received ITIN … : tick “No/Do Not Know” (unless you have).
- 6f. Enter TIN/EIN… : <Leave this blank unless you have an EIN>
- 6g. Name of University/Company… : “n/a” (leave City/State and Length blank).
Check Once, Check Twice, Check Thrice (Recommended)
You don’t get second chances with this form (otherwise you need to re-do the entire submission) – so check you’ve entered everything you are supposed to. Ie. don’t forget to sign and date and provide contact number.
Document #2 – Obtaining your Notarized Passport
A notarized passport document is required for identification so that you don’t need to send in your original Passport. This document is generated by the Australian DFAT (Department of Foreign Affairs and Trade) – and is basically a photocopy of your passport page – along with a special ‘Apostile’ stamp (sort of like a wax seal with an official rubber stamp that’s been filled out and signed).
Getting this document will cost you about $60 – plus any additional courier/return envelope fees. This is a lot cheaper than getting a public notary to sign it for you (which may cost in the $100’s of dollars).
In order to obtain this document – you can either visit the Passport office in your capital city – or you can courier in your Passport and the appropriate payment details.
For example – in Melbourne goto the following link : http://www.dfat.gov.au/melbourne/index.html – and click on the ‘Notarial Services’ link. You can then download the request form at Notarial Services Request Form (.pdf).
I personally did it all by mail – filled in the above request form – and included a trackable Australia Post Express Post satchel so it could be returned. It took around 5 working days for everything.
Note that some people interstate reported their Passport office was being difficult and saying they weren’t able to get notarized documents issued. If this is the case – perhaps try dealing direct with the Melbourne office (note they aren’t very good at answering their phone – particularly at lunch time – and it may just ring out).
Also Note : the IRS did NOT return my notarized document – even though I’d specifically requested this in the cover letter to them. So note that if your ITIN application is rejected – you may need to pay for this notarization document AGAIN – as photocopying the returned apostille document is not considered a valid document.
Document #3 – The Microsoft Letter
Ok – this is the most worrying bit of the whole process. It involves printing out a PDF letter provided by Microsoft at this address .
You then need to add the Date (in US MM/DD/YYYY format) – and add your first and last name to make the document complete.
The massive problem is the IRS seem to be rejecting this letter for many developers saying it’s not valid (has been happening since Dec 2010). I was very lucky and the IRS accepted my Microsoft Letter – not sure why – but I’m not complaining.
For many developers – they have not been so successful – and as it costs $$$ for notarization documents, courier fees, accountants advice – and for many non English speakers special agents to handle their documentation – some have reported their applications have been rejected several times (costing them $100’s of dollars). Keeping in mind applications can take 4-10 weeks with the IRS – some of them have been waiting months to find out they’ve been rejected each time.
The extremely disappointing thing about all this is that Microsoft have been aware of this problem for several months and are pretty much doing nothing to remedy it (even though it’s THEIR LETTER WHICH IS AT FAULT).
While I love the whole WP7 platform, the tools and the awesome device – the Microsoft Commerce team have severely let down a huge amount of developers in regards to this issue. What’s downright appalling is that they won’t even mention this problem in the FAQ document for receiving payments (where you get the Microsoft Letter from) – and they are just happy to let developers suffer the expense and frustration. You only actually find out about this problem if you either get rejected – or you happen to look in the developer forums and see the many complaints from developers.
One particular thread : http://forums.create.msdn.com/forums/p/76009/486532.aspx shows the outright poor handling of this matter. After over 2 months – Microsoft are still doing pretty much nothing about this issue and chipping in either a ‘we are still evaluating it’ or a ‘it worked last year’ statement. (neither of which is any help to anyone).
Submitting everything to the IRS (and holding your breath)
Once you’ve got your 3 x documents (W-7, Notarized Passport and Microsoft Letter) – you’re ready to submit these to the IRS.
I included a cover letter as well – explaining again why I needed the ITIN and requesting that they returned the Notarized passport document (which they ignored and kept).
You need to snail mail it to :
Internal Revenue Service
P.O. Box 149342
Austin, TX 78714-9342
For safe measure I used a more expensive Australia Post International Express Post option (with a delivery confirmation) – cost I think around $15 all up – however if you have faith in the postal system you can just use a standard Airmail envelope.
Anyhow I hope this blog post was valuable to you and saved you a lot of the mucking about I had to do (particularly on how to get the notarized passport and what fields needed to be filled out on the W-7).
You may want to check with your accountant to be 100% sure. Note that most Australian accountants – like mine – actually don’t have any clue about this stuff – so take advice with a grain of salt (I actually got wrong advice on my W8 and it was rejected). If you’re actually eligible for a EIN (instead of ITIN) than this will make things considerably simpler too.
Best of Luck – and may your ITIN application get accepted first time around!