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CoMakery / dynamic-royalty-license

STATUS: EARLY DRAFT - A license to maximize open innovation and collaborative peer production through royalty sharing tokens.
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Streamlined taxation needed #19

Open aquabu opened 8 years ago

aquabu commented 8 years ago

It should be clear that the individual receiving the royalties is repsonsible for their own taxes. Also, we don't want the royalty payer to be burdened with a 1099 form.

jesseposner commented 8 years ago

I added the following provision addressing taxes in 1e43d8157f25c2b8ce18ca048fc15cad133cb919:

You will bear the cost of any taxes (exclusive of taxes based on the net income of the Contributors), levies, duties and fees of any kind, nature or description whatsoever applicable to the payment of the Royalty Percentage. Each Contributor will bear the cost of any taxes, levies, duties and fees of any kind, nature or description whatsoever based on the net income of the Contributor.

aquabu commented 8 years ago

@jesseposner will the royalty payer be responsible for sending a 1099 to each contributor that receives > $600 in royalties? I hope this can be avoided.

jesseposner commented 8 years ago

I'm having trouble coming up with an ideal solution to the 1099 issue. Right now I'm seeing two options:

1. Require every contributor to be a corporation or LLC.

Payments to a corporation or LLC do not have to be reported on a 1099.

2. Require a core contributor to be a corporation or LLC and that entity would be the designee for ownership of the Royalty Payment Address.

This entity would then need to collect tax disclosure information (e.g. w9) from all contributors before distributing any royalties to those contributors, and would file the 1099s to the IRS.