Kirkland, WA asked in Tax Law for Washington

Q: Can a publisher legally file their taxes without knowing the real names of the authors who publish through them?

I apologize if this is a dumb question, but I am a bit on the young side so I (fortunately) have not had much tax experience.

To make a long story short, I have been considering trying to start a small publishing house that focuses on maintaining anonymity for the author - not even I would know who I am publishing for. This could be accomplished using Pretty Good Privacy (PGP) and cryptocurrency (Bitcoin or Ether). That has its own set of problems, but those problems are not worth discussing if it would not be legal in the first place. Sadly, I can't find any information on publisher's taxes, so I'd be very grateful for any light shed on this question. Thank you!

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1 Lawyer Answer
Michelle D. Wynn
Michelle D. Wynn
  • Tax Law Lawyer
  • Melbourne, FL

A: This proposed business model may cause some issues with intellectual property and copyright issues (and perhaps other issues if the reasons for secrecy impacted criminal law concerns), but for tax purposes the biggest issue would be not being able to issue 1099s to your authors. Typically publishers would receive the income for any works sold and then would pass through the income to the authors as royalties. For tax purposes, when you issue payments in the course of business of more than $600 to any specific person or business (or $10 or more for royalty payments), you need to file a 1099 with the IRS and send a copy to the person you are paying. If you fail to do this, you can be subjected to penalties by the IRS. In order to meet this obligation, you are required to take reasonable steps to obtain the name, address, and taxpayer identification number of any person to whom you expect to pay over the reporting threshold. By following your business model, you would be showing that you instead took active steps not to learn the identity of your authors - even if your reason for doing so had nothing to do with avoiding taxes and this could open an even bigger can of worms for you.

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