have a conversation with the IRS

[chadwhitacre]

Picking up from #96 and #960, I just sent this email:

[Person],

Greetings! My name is Chad Whitacre. @timothyfcook gave me your info; your niece so-and-so was a student of mine at Tim's Saxifrage School last year. We had fun learning how to write software together. :-)

I'm writing because I've started a fundraising website, and I'd like to start building a relationship with the IRS so I can make sure we're not heading for any compliance headaches. Are you a good person to have an initial conversation with about that? Would you be up for a phone call some time to discuss?

Thank you for any pointers.

chad

Chad Whitacre, Founder, Gittip
https://www.gittip.com/
https://twitter.com/whit537
[email protected]
+1-412-925-4220 (cell)

Want to back this issue? Post a bounty on it! We accept bounties via Bountysource.

[chadwhitacre]

I think our line is going to end up being that income you receive on Gittip is taxable income as soon as you receive it on Gittip (not just when you withdraw it from Gittip). Surely that is going to be the line that the IRS and other national tax bureaus are going to take. Just as surely, Gittip's reporting requirements in this regard are going to vary from country to country. We need to provide reports both to users on the one hand to support their tax accounting, and also possibly to various governments.

[chadwhitacre]

@timothyfcook is pushing back on the idea that money is taxable as soon as it hits you on Gittip. That means money that's regifted around Gittip is taxed more than once.

[chrisdev]

@whit537 eventually the whole withholding tax thing has to come up for the foreign participants.
I think that if the US does not have a tax treaty with the country in which a participant resides (main residence) @gittip may be forced to withhold 20 % (or is it 30%?) of the participants tip income.
This sounds really onerous and definitely a burden but in practice if the IRS actually asks you to collect withholding from participants then @gittip would have succeeded in a big way :) !

In other words, at this point in time @gittip don't have much to worry about but this should be definitely be reviewed in the next six to nine months.

[chadwhitacre]

+1 from @jacobian on Twitter.

[chadwhitacre]

+1 from @qrush on Twitter.

[coderanger]

Ping to @cieplak and @timnguyen who have been working on the 1099 stuff on our side.

[timnguyen]

Gittip's tax questions usually tend to fall outside the scope of our 1099 items because none of its recipients are really hitting the 1099k threshold (so it's outside the scope of Balanced's reporting requirements). @whit537 I'll see if I can put you in touch with one of my tax lawyer friends or if one of them can get you a framework and game plan to work with.

In general, I'm not against direct contact with the IRS, but I think it might be prudent to make sure that when you talk to them you make sure you end up talking to the appropriate subject matter expert (or someone who can point you to that person) and to plan what and how you disclose so that you can limit misunderstandings or additional requests/requirements which may not be required.

[chadwhitacre]

That'd be awesome, @timnguyen, thanks. :-)

[chadwhitacre]

Connected with Lucy Bernholz today (here in Pittsburgh). She mentioned Etsy having a go-round with regulators over toys a couple years ago. I guess they managed to have the conversation fairly openly. Hoping to hear more about this ...

[garybernhardt]

It's been two years since the original tax thread and this is still the biggest thing holding me back (I'm here because I was actively searching for the latest tax situation.) I guess that's a +1.

[chadwhitacre]

+1 from @jcasimir on Twitter.

[jcasimir]

My mom is an experienced tax lawyer. I'm sure I can sit down with her,
explain how things work, and get her thoughts. Once the (late) filing
season is over, maybe July or so, she'd do it for free. We could setup a
Google Hangout for you (Chad) to join and anyone else you want involved.

On Fri, May 2, 2014 at 9:15 AM, Chad Whitacre [email protected]:

+1 from @jcasimir https://github.com/jcasimir on Twitterhttps://twitter.com/j3/status/462226614516854784
.

—
Reply to this email directly or view it on GitHubhttps://github.com//issues/1941#issuecomment-42042508
.

[chadwhitacre]

@jcasimir Are you serious!? That would be a dream come true! :-) I'll ping you in July if I don't hear from you?

[jcasimir]

Yes, please do. Like any expert she gives more advice than you want, but
she has a good team who'll look into the regulations and such. In
particular I know there are some new ones this year with regards to
international transfers that could be important.

On Fri, May 2, 2014 at 10:42 AM, Chad Whitacre [email protected]:

@jcasimir https://github.com/jcasimir Are you serious!? That would be a
dream come true! :-) I'll ping you in July if I don't hear from you?

—
Reply to this email directly or view it on GitHubhttps://github.com//issues/1941#issuecomment-42051993
.

[chadwhitacre]

@jcasimir Will do! Thank you! :D

[chadwhitacre]

Closing with gratipay/inside.gratipay.com#242 (comment).