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AC Tax Fraud & How To Legally Prevent It ...

Discussion in 'Business & Tax Advice' started by jammie, Oct 27, 2008.

  1. jammie

    jammie Jr. VIP Jr. VIP Premium Member

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    Hi,

    Well basically i got thinking the other day about starting to push a serious ammount of content through AC (100-200 articles a day) and this got me thinking.

    I'm not in the US so can't exactly send in a tax form or anything, and i'm pretty sure they'd notice me submitting alot of articles every day to new accounts (due to $600 limit)

    So basically i was wondering my options ...

    1.) ask someone in the US to sort out all the tax etc. for a cut of the profits. (But this seems too hard to work in practice.)

    2.) set up an LLC based in America. (Expensive)

    3.) move to the US & do everything like that. (Impractical)

    I'd really love this as an automatic income as it helps both me (money), AC (content), and the writers(repuation+paid), but can't see a "cheap" way of getting around the tax issue.

    Setting up a corporation seems the easiest way, but adding $800 to startup costs sucks!

    Anyone got any other ideas? I'd love to hear them! Want to milk this for all its worth.

    Jamie.
     
  2. Steb

    Steb Registered Member

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    I think you are in the UK arent you? why cant you send in a tax form? surely you would just send in a scan of a WBEN-8 (I think!) form that says you arent to be taxed on their end, and pay your income tax on this end same as usual...
     
  3. scubaslick

    scubaslick Regular Member

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    Not really that hard to do, just hard to find someone you can trust with that much money.

    To set up a small business entity in the US is only a few dollars. In Texas for example it's about $20 if you do it offline (go to the county office and file the paperwork yourself).

    Taxes are easy enough, but the person who does it is responsible for paying the taxes, so they'll want control over the bank account.

    This means that they receive the money, hold out the appropriate taxes plus their share, then forward the cash to you.

    This would take maybe 45 minutes a month, plus a little extra time at the end of the tax year.

    If you can honestly drive $100-200 a day into the account, I'd say a 25% cut (after tax liability) and you could have dozens of people willing to work an hour a month for a couple hundred $US.

    If they don't pay up, stop sending content to AC so the money stops coming in.

    Really just a matter of finding someone (or several someones) you can trust.
     
  4. topam

    topam Registered Member

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    Im looking for a way to get round the tax issues at AC as well since Im not in the US...
     
  5. scubaslick

    scubaslick Regular Member

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    heh. I see a US outsourcing service being born here.

    If you guys are serious, hit me with a PM. I might be able to help you out. I have several lazy friends who wouldn't mind collecting checks each month. :)
     
  6. jammie

    jammie Jr. VIP Jr. VIP Premium Member

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    Cheers for the help guys. Seems that the easiest way is to get someone in the US to do it for me.

    I just don't want to be f**ked by the long dick of the US I*R*S, they hate everything with a pulse (or so it seems!) so just wanted to be careful!

    I'll post around see how many articles i can get a month. If i can get over 1000 articles a month (Approx $3k/month from AC) i'll take you up on that offer Scuba!

    Get articles for $0.75, sell on AC for $2-$4, deduce tax, pay people for handling taxes & submitting to AC etc.

    Could eaily pull $1500+ a month off this on autopilot (based on $600ish a month expenses after article writers). Hmmm!

    I'll get advertising and see what i can do!
     
  7. flow

    flow Regular Member

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    Do you understand that submitting content that *you* are not the author of to AC is against their TOS? IE you're committing fraud.
     
  8. scubaslick

    scubaslick Regular Member

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    This actually made me chuckle. I feel all warm inside now. Thank you for this. I needed it. Been a long, grueling day.

    :)
     
  9. Uptownbulker

    Uptownbulker BANNED BANNED

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    Jamie, I'm your guy!

    Corporations in the USA are not subject to witholdings and if such corporations show no profit at the end of the year, are not subject to tax.

    What relationship you have with Inland Revenue is strictly up to you on your end.

    PM me and in the meantime, hit my sig for details.

    I can make you a deal.
     
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  10. jammie

    jammie Jr. VIP Jr. VIP Premium Member

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    Well i'm in the process of recruiting some muppets to slave away doing me 50 articles a day for half a dollar each, so if i get a few i'll be oveer to you in a flash :)

    I'd love having an anonymous corp, however thats a luxury at the moment, but may be comming a nessecity quite soon ;)
     
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  11. flow

    flow Regular Member

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    I'm sure you all already know what I said, and I'm not too familiar with all this, but I figure companies will only pursue serious fraud... and at a website like AC, 3000+USD a month is not just pocket change...

    On a side note, 50 cent unique articles, or rewrites?
     
  12. scubaslick

    scubaslick Regular Member

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    Hey Flow, I'm not an attorney, but I am a published author. The term that Jammie would have to use to avoid any further discussion on the matter of fraud is "work for hire." There's no fraud involved here at all if he's having the articles rewritten. If he isn't, then he's potentially in violation of copyright law, but AC can't do anything about that except refuse to pay him and - if they can identify the original author - tell the author about the violations. The original author could then demand restitution but over a few dollars probably wouldn't even bother.

    Major corporations don't even bother suing unless there's a LOT of money on the table. The reason is that there's a very fine line between plagiarism and free use of publically available material. The internet is a very hazy area because it is by definition a means of information transfer. If you put it on the internet, you clearly want the largest audience possible. It's VERY difficult to prove that someone violated your copyright by using material you put out on the internet voluntarily.

    In this case, he owns the copyright to the material because it is an original work written for hire.

    He's fine. The only problem is the tax liability which Uptown can help him with.

    I chuckled because this is a blackhat forum and your warning was so seriously and honestly delivered. It just made me feel good for some reason that there are people in the world who haven't gotten as jaded as myself.

    -scuba
     
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  13. flow

    flow Regular Member

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    Hey scuba,

    LOL you might not want to assume my innocence. I was just making sure jammie knew what he was doing :D

    My understanding is that because he is breaking AC's TOS to make money from them, he is committing fraud. If someone pays you for something (and it's in a contract), and you give them something else that looks like what you agreed on but isn't, then that is fraud.

    Code:
    Can I submit content I bought or own the rights to but did not create?
    No. You can only submit original content you created. And you cannot rewrite others' content and submit it as your original work.
     
    Last edited: Oct 29, 2008
  14. mattstrike

    mattstrike Regular Member

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    Flow,

    I believe that there is a subtle but important distinction between a work for hire, and purchased content, in this case.

    If someone had already written something, and Jammie bought it from them, then he would certainly be violating the TOS, but, since he is hiring them to do the writing, my guess is that, as long as they are not screwing him by reselling the same articles out the back door, he is fine.

    Looking at it another way: What if I signed up with AC as a company (not an individual). How is that company supposed to create content without hiring someone else to do it?

    My final thought: AC clearly just wants the traffic from the articles, so as long as they don't find out that you screwed them by putting up content that was not original, they have no reason to dig into it any further than that.
     
  15. teguh123

    teguh123 BANNED BANNED Premium Member

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    If you make less than $600 you don't pay tax I think..

    So, about that tax thing, one way to avoid that is to simply create a lot of AC account so no account made more than $600 per month. Yes there is an issue that you cannot make more than 1. You're not hurting AC in anyway and they don't have intensive to pursue you. I haven't heard any criminal charge against people doing it (since who bother?) So you should be okay.

    Is AC different than cj.com and so on? As far as I know, the rest will simply ask you to file W8 indicating that you're not a US entity and you're free from having to pay tax. End of story. It's that simple really. Most affiliates are like that. Why should AC be different?

    Why it has to be that complicated with associated content?
     
  16. flow

    flow Regular Member

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    mattstrike, the point is, as AC's TOS states, you have to be the original creator of the content. By submitting anything not written by you (or even rewritten by you) you are in violation of their TOS. I don't imagine you can sign up as a company... but if you could, that would be perfect- you wouldn't need to break the TOS.
     
  17. jammie

    jammie Jr. VIP Jr. VIP Premium Member

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    i'm sure that buying the rights to the content would be fine, of course, i don't really want to ask AC.

    Interested in this W8. I'm guessing the US and the UK have a trade agreement for tax and stuff so that might be useful.

    Also, i'd be sending about 80k-90k PLR articles to be rewrote into about 10k new, uniques ones.

    I'm sure in the contract between the freelancers you could add that you are buying the right to be the legal creator etc. or some stupid thing.

    Still, a corporation fixes this i guess. :p The corporation owns the people who own the content. some may not see it like that but i do.

    i'd say Micr0s0ft "own" windows, wouldn't you?
     
  18. Uptownbulker

    Uptownbulker BANNED BANNED

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    OK, the deal on copryright is this:

    If you hire someone to create a work of intellectual property, art, photography, etc; YOU own the work, NOT the creator but it is always a good idea to have that in writing as there is always someone who will try to challenge your copyright claim if you start making money with it.

    If you BUY an article, you MUST get it in writing that YOU have become the owner of the intellectual property and copyright or they will invariably tell you that you bought "first rights" only and that they still own the copyright and in such an instance they would be correct.

    GET IT IN WRITING!

    An email or acceptance of Terms Of Service with a digital signature will suffice and don't lose it!

    Make certain that you are the owner!

    I should have a contract for the purchase and/or creation of intellectual property around here someplace, so I'll find it and get you a download link or email it to you.
     
  19. ken3401

    ken3401 Regular Member

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    I don't see the big worry about this, if working with a corporation resolve the issue, then as soon as you make enough money go right ahead.

    But I don't think I should be worrying about AC for the long run because I really don't intend to do this long-term. As soon as I make enough to put into other internet business then there won't be a need to continue this method.

    The most I see can come out of AC finding out about me since I'm outside the US, is getting my account banned.
     
  20. Uptownbulker

    Uptownbulker BANNED BANNED

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    Do up a USA corporation and make sure to use US proxies and they will never find out!