The maze of US tax bureaucracy and ITIN numbers
2 Oct 2004

Written by Neil McKenna.

You've done all the hard graft – found an agent, found a publisher, written the bloody thing, gone through the editing nightmare, had the book published and received some reasonably good notices. At last, you say to yourself, I can come off Prozac, get that leaking loo attended to, have a holiday and reclaim my life from the dark madness of writing.

Then your agent rings. It's good news. A resolutely upscale New York publisher is desperate to publish your opus. The money's not brilliant, but not to be sneezed at. Besides which, they're so polite, compared to the take it or leave attitude of many British publishers. And they really really want you to come over and promote the book. There's even a budget for this. Great. Fantastic.

Then a little e-mail from your agent. You need an US Internal Revenue Service Individual Taxpayer Identification Number, an ITIN for short. You need an ITIN because without one, your US advance will be taxed, and taxed heavily, at source and it'll be the devil's own job to claw that tax back. Fine. So you do as your agent helpfully suggests and go to www.irs.gov and download Form W-7, Form W-8BEN, together with three pages of notes in a tiny point size.

Twenty minutes later you start groping for the Prozac. The gloom has descended. You realise it is true, as Oscar Wilde once wrote, that Britain and the United Sates are two nations divided by a common language. Forms W-7 and W-8BEN are almost unintelligible – at least to the British psyche. At the very end of the notes, under what I now realise is the ironic heading, ‘Paperwork Reduction Act Notice', the notes very helpfully tell me exactly how many minutes it will take me to complete: reading the notes – 13 minutes; filling in the form – 29 minutes; and copying it and posting it – 20 minutes. Just 62 minutes in all. Ha!

After what felt like a dark voyage into the innermost depths of a Kafkaesque nightmare, but was in fact about sixteen hours over two or three days, I emerged, pale, drawn but ultimately victorious with a completed form.

The biggest hurdle comes at the beginning of the form, under the ‘Reason you are submitting Form W-7'. After three calls to the IRS in Philadelphia, I finally got it right. I ticked Box a because I am a non-resident alien claiming a tax treaty benefit. I discovered that I also had to tick Box h, unhelpfully marked ‘Other (see instructions'. Here I had to write in ‘Exception 1' which basically means that I ‘own an asset that generates income' in the US. In other words, I have a book that will generate royalties. Under this I had to enter the name of the ‘treaty country' which is our own dear United Kingdom, and something called the ‘treaty article number'. Here I struggled and almost went under. What was needed was the precise reference to the mutual tax treaty between Britain and the US.

Another flustered call to Philadelphia. Don't worry, they said, it's on our searchable website at www.irs.gov. Two hours later, and on the verge of a nervous breakdown, I ring my normally-not-terribly-helpful-tax-office. They came up trumps. Don't worry, a calm female voice reassured me. I'll find out and call you back. Less than an hour later she rang. It's Article 12, she said, and you'd better put ‘Book Royalties' in brackets.

I subsequently discovered that there is an IRS office in the US Embassy in Grosvenor Square where an incredibly helpful team are used to guiding bewildered Brits through the maze of US tax bureaucracy. If you are having problems, you can go there in person and they will help with the forms. Make sure you ring up and check the office opening times which are irregular and seemingly subject to change.

In order to be issued with an ITIN number, you have to submit ID, together with a copy of your contract. The ID is tricky, sending a passport, a birth certificate, or a driving license to Philadelphia is a bit worrying. But again, the helpful IRS office at the US Embassy came to my rescue. They will inspect your passport and birth certificate, and mark your form for you. Then all you need to send is a copy of your contract.

It's been six weeks since I first downloaded Form W-7 and entered the topsy-turvy world of the IRS. I'm waiting for my ITIN number. When I get that, I can fill in, with the help of the British IRS office, Form W-8BEN, and that should be that.

Apart from the occasional nightmare and the odd panic attack when I glimpse the file of paperwork, I'm just about fine now and ready to start thinking about coming off medication. It's been a journey to the very heart of bureaucratic darkness but I'm here to tell the tale...