Tax Info

All sellers are required to submit tax forms prior to their accounts being activated. Documents which are incomplete will not be processed. Documents must have a signature on them to be processed. Please submit completed tax forms to cpstaff@smithmicro.com. Be sure to include your seller name in your communication.

The links below will direct you to the various tax forms. If you are unsure what form(s) to use, we recommend you consult your tax advisor.

Forms
W-9
W-8BEN
W-8ECI

Instructions
W-9 Instructions
W-8BEN Instructions
W-8ECI Instructions

FOREIGN TAX WITHHOLDING

In general, the United States tax law requires withholding of income tax on U.S.-source royalty payments made to foreign persons. The normal withholding rate is 30%. The rate can be reduced or withholding eliminated by a tax treaty between the U.S. and the foreign person’s country of tax residence. To take advantage of the reduced treaty rate, the foreign person who is the beneficial owner of the income must complete and submit Form W-8BEN. However, Form W-8ECI is used instead if the foreign person has a U.S. tax identification number and claims that the income is effectively connected with the conduct of a trade or business in the United States. We recommend that you consult with your tax advisor in completing Form W-8 BEN or W-8ECI. (Provided by TaxGroup Partners.)

Will taxes be withheld from the payments I receive from SMSI?
Generally taxes will be withheld on the payments for U.S.-source royalty payments that SMSI pays to you. The tax withholding rate will depend on whether there is a tax treaty between the U.S. and your country of residence. If a treaty exists, the rate can be as low as 0%. If no treaty exists, the rate is 30%.

How often are taxes withheld?
If you are subject to income tax withholding then taxes will be withheld from each payment SMSI pays to you.

What are tax treaties?
A tax treaty is an agreement between national governments to prevent double taxation and tax evasion when a resident of one country earns income in the other country. A tax treaty generally determines the amount of tax that a country can apply to a noncitizen or nonresident taxpayer’s income and wealth.

Do you have a list of countries that have treaties with the US with the lower treaty withholding rates?
SMSI pays royalty payments to persons that are residents of the countries listed below. The table below is a partial listing. If your country is not listed, please check with your tax advisor regarding possible tax treaties with the US.

Note 1> A bona fide resident of Puerto Rico who is not a US citizen or a US national is treated as a nonresident alien for withholding purposes.

Note 2> The withholding rates stated above are the based on existing tax treaties. Tax treaties may be changed from time to time; please check with your tax advisor regarding claiming a tax treaty withholding rate.

Why are the withholding rates different for different countries?
The rates are negotiated separately for each treaty.

Where can I get a copy of the Form W-8BEN or W-8ECI?
The IRS tax forms can be found linked at the top of this page.

Which form (W-8BEN or W-8ECI) should I complete?
Generally, Form W-8BEN should be completed for royalty payments that SMSI pays to you. However, the W-8ECI is used if you have a U.S. tax identification number, you claim that the royalty payment is income that is effectively connected with the conduct of a trade or business in the United States and such income is includible in your gross income for the tax year.

How do I complete the Form W-8BEN or W-8ECI?
Follow the instructions provided by the IRS. Form W-8BEN and Form W-8ECI are one-page forms that ask for beneficial owner identification (name, address, the type of entity (individual or corporation, etc.), U.S. tax identification number and foreign tax identification number. Form W-8BEN also asks for tax treaty information including the treaty article number establishing the withholding rate.

Where do I send the completed Form W-8BEN or W-8ECI?
Send a copy of the completed and signed Form W-8BEN or W-8ECI to CP Staff. Faxed or scanned copies are acceptable. The forms are maintained in our files to document the applicable withholding rates. Please send the completed and signed form to one of the following:
Fax number: 011+ 831-761-6206
Email address: cpstaff@smithmicro.com

When must I submit Form W-8BEN or W-8ECI?
The Form W-8BEN or W-8ECI must be received by SMSI before your account will be activated. Until it is received, you will not be permitted to set up your products.

How do I recover the taxes withheld from the payment I received from SMSI?
The purpose of withholding income tax on payments to a foreign person is to ensure that the foreign person pays his or her fair share of U.S. income tax on U.S.-source income. Therefore, you must file a U.S. income tax return to recover any tax withheld in excess of the U.S. income tax that you owe.