ExtortionLetterInfo Forums
ELI Forums => Getty Images Letter Forum => Topic started by: Matthew Chan on June 12, 2012, 08:16:58 PM
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As if getting a Getty Images Extortion Letter isn't bad enough, we have just come across an extortion letter amount that adds an additional 8.25% sales tax in Texas!
http://www.scribd.com/doc/96889482/Getty-Images-Settlement-Demand-Letter-with-Sales-Tax-2012
The problem I have with this is that this is supposed to be a legal "settlement", not a "sale". Only legitimate sales are supposed to be taxed. How can legal settlements be taxed? I wonder how many extortion letters have sales taxes tacked on to the extortion amount. Which states are getting sales tax added to the extortion letter amount? Is it selective states or all 50 states? How does this correlate to the actual physical presences Getty Images has in each state? We need to keep our ear to the ground.
This very fishy to me. It's not a sale but they still want to take on a extra percentage of sales tax. But it does further support the notion that Getty Images regard this as "sales revenue", not loss recovery as is typical with most collection efforts.
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Well their site does not include a location in Texas. I bet the State AG of both Texas and Washington would like to hear about this..sales tax on a "CLAIM"...I guess we'll never see it all!
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Ya...are you kidding me with the sales tax?
I just looked up the artist's name at the Copyright Office. There is only ONE listing for this photographer and it's not the image shown. (nothing new) Not even a "Visual Aid"!
Carl Warner's Food Landscapes. TX0007296761 2010
Also....$1225.00 for ONE image??? Plaaaaeeeez!
>:(
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uh-oh, I think someone is peeved!! Nice research
Lucy! That pretty much shots this one in the foot!
Ya...are you kidding me with the sales tax?
I just looked up the artists name at the Copyright Office. There is only ONE listing for this photographer and it's not the image shown. (nothing new)
Also....$1225.00 for ONE image??? Plaaaaeeeez!
>:(
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I recall that more than one forum contributor has mentioned this previously.
I especially recall a couple of demands in EU wherein a VAT tax demanded.
So, I think that they've been trying this out for a while.
What a bunch of crooked assholes.
S.G.
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Now that SG mentions t,I too remember seeing the VAT on letters from overseas.
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Maybe "someone" (RK?) could call Texas Comptroller's office and find out if Getty Images actually pays in sales tax. Or see if Getty Images has a Certificate of Good Standing in regards to state tax collections. Is Getty Images, in fact, truly collecting sales tax or not?
http://www.window.state.tx.us/taxinfo/fieldtoll.html
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Lets not be subtle here or anything...
Maybe "someone" (RK?) could call Texas Comptroller's office and find out if Getty Images actually pays in sales tax. Or see if Getty Images has a Certificate of Good Standing in regards to state tax collections. Is Getty Images, in fact, truly collecting sales tax or not?
http://www.window.state.tx.us/taxinfo/fieldtoll.html
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If Getty is collecting the tax and not paying it to the state, that can be in for some TROUBLE!
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I'm going to try to give Texas a call tomorrow and ask a few questions,will report back promptly..
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Stinger is absolutely correct. Collecting sales tax and failing to file and pay it to the state would be fraudulent and the state of Texas probably would vigorously disapprove.
As for the logic behind collecting the sales tax as part of the the claim, one would have to look at the specific law in that state since sales tax mechanisms vary widely from state to state. Some states have no sales tax at all, some have brutal sales tax rules. Here's what Texas has to say about their system:
1. Who is required to hold a Texas sales and use tax permit?
You must obtain a Texas sales and use tax permit if you are engaged in business in Texas and you:
• sell tangible personal property in Texas;
• lease tangible personal property in Texas; or
• sell taxable services in Texas.
Please see Rule 3.286 and publication 96-259 Taxable Services (PDF, 1.2MB) for more information.
The requirement to obtain a Texas sales and use tax permit applies to individuals as well as corporations, firms, partnerships, and all other legal entities.
2. What is tangible personal property?
The statutory definition for "tangible personal property" is "personal property that can be seen, weighed, measured, felt, or touched or that is perceptible to the senses." See Sec. 151.009.
3. What is engaged in business?
A person or a retailer is engaged in business in Texas if any of the following criteria are met:
(A) maintains, occupies, or uses an office, place of distribution, sales or sample room, warehouse or storage place, or other place of business;
(B) has any representative, agent, salesperson, canvasser, or solicitor who operates in this state under the authority of the seller to sell, deliver, or take orders for any taxable items;
(C) promotes a flea market, trade day, or other event that involves sales of taxable items;
(D) uses independent salespersons in direct sales of taxable items;
(E) derives receipts from a rental or lease of tangible personal property that is located in this state;
(F) allows a franchisee or licensee to operate under its trade name if the franchisee or licensee is required to collect Texas sales or use tax; or
(G) conducts business in this state through employees, agents, or independent contractors.
See Rule 3.286.
Source: http://www.window.state.tx.us/taxinfo/sales/faq_permit.html
So this is my take on the logic of collecting sales tax for an extortionate claim: Since Getty's claim involves the purchase of a retroactive license, it qualifies as a sale of tangible property. The license for a photograph is tangible property because a photograph qualifies as "personal property that can be seen..." Getty may not directly have operations in the State of Texas, but they are engaged in business because the company "conducts business in this state through employees, agents or independent contractors," meaning their copyright trolls.
Getty has apparently created a form of extortion that is subject to sales tax under Texas state law by insisting on the purchase of the retroactive license, which is a sale of tangible personal property. This may be an unintended consequence of their current copyright trolling business model. To play it safe and give the extortionate demand an air of legitimacy, their legal henchmen have probably decided that it's best to collect the sales tax, file the paperwork with the state, and pay whatever amount they collect.
Whether or not they're actually filing and paying is an entirely different question, and I think it's one worth the price of a call. I'm with Buddhapi on that. Give them your best Southern hospitality drawl, Buddhapi. They'll be glad to help.
If they're actually filing, this would be one way of finding out how much money they're raising in the state Texas. The state would have all the records on the total amounts for the filings and how much tax was collected. I'm not sure the state of Texas shares that information freely for any given account holder, but it wouldn't hurt to ask.
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Getty does indeed have tax information listed in the state of texas, I'm still unclear if this permits them to collect sales tax, as I see it this allows them to issue resale certificates..
https://ourcpa.cpa.state.tx.us/staxpayersearch/salestaxpayer.do
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Buddhapi, your link won't work because their search results expire after a given amount of time. I looked up "Getty Images" in their database and 3 different listings show up. Only one shows an active account. Here's the skinny on the active account:
Taxpayer Name: GETTY IMAGES (US), INC.
Mailing Address: 605 5TH AVE S STE 400 SEATTLE, WA 98104
Taxpayer Number: 11328088197
Permit Status: ACTIVE
PERMIT STATUS
Active - The taxpayer has an active sales tax permit and is eligible to issue a resale certificate to their suppliers to purchase qualifying items tax-free for resale.
*If you sell a taxable item to a customer, you must collect sales tax unless you accept a properly completed resale certificate. A customer's sales tax permit number or a copy of the customer's permit is not a substitute for a resale certificate and does not relieve the seller of the responsibility for collecting sales tax.
For more information on resale certificates, see our frequently asked questions and Rule 3.285, Resale Certificate; Sales for Resale.
An out of state retailer may issue a Texas resale certificate using the taxpayer number issued by their home state and is not required to register for a Texas sales tax permit.
So they do have to collect sales tax, file and pay with the state of Texas. They are also allowed to issue a resale certificate. If they buy something for resale, they don't have to pay sales tax on that transaction. When they sell the item to an end-user who does NOT provide them with a resale certificate, they are obligated to collect sales tax from that buyer. It's similar in California.
There's still the question of whether they are actually collecting, filing and paying the sales tax to the state of Texas, and if so, it would be interesting to find out how much they collect for "retroactive licenses", or as we like to refer to them, extortionate fees.
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This could be very interesting. To my knowledge, you cannot collect sales tax on an infringement; that's a settlement not a sale. More importantly, the forum is correct that if you collect sales tax, you better forward it to the proper authorities as opposed to keeping it yourself. It would be interesting to track when and where they ad sales tax to their letters. We are seeing it once in a blue moon in my office as well recently. I would like to hear from any Getty victim who settled with Getty and included sales tax in their settlement. There may be the elements of a class action there if Getty is wrongfully charging sales tax.
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As Moe pointed out, they may be collecting tax on the retro-active license part, and justifyong it as not part of the "claim"
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Yes I realize that would be their claim. My point is that if that is the case, then why are they only charging it now and again and not in every letter because presumably they could make the same argument for all settlements and are they then sending the government the sales tax they collect?
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Sales tax is highly regulated with very specific rules in reporting and payment. In the case I saw, the letter was being sent to a recipient in Texas. But why Texas? Generally sales tax is only collected by businesses that have a physical presence. There appears to be no Getty presence we can find in Texas at this time. Unless it is one of the Getty Images subsidiaries that have a presence.
In any case, all the Getty letters have specified that this is a "settlement", not a retroactive license or another product-based item subject to sales tax.
As aggressive as Getty might be, it is difficult for me to imagine them doing something so blatantly underhanded. There is a piece of information we do not have.
We absolutely need to find out which states are getting letters where sales tax is being added to the amount. Something is definitely off here.
This could be very interesting. To my knowledge, you cannot collect sales tax on an infringement; that's a settlement not a sale. More importantly, the forum is correct that if you collect sales tax, you better forward it to the proper authorities as opposed to keeping it yourself. It would be interesting to track when and where they ad sales tax to their letters. We are seeing it once in a blue moon in my office as well recently. I would like to hear from any Getty victim who settled with Getty and included sales tax in their settlement. There may be the elements of a class action there if Getty is wrongfully charging sales tax.
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Will start to have my office keep a lookout for "tax added" letters
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why do I have a feeling I 'll be making some calls to different states in the near future??
Will start to have my office keep a lookout for "tax added" letters
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I'm unfamiliar with US law but as has already been mentioned they do charge VAT here in the EU. That to me suggests they are trying to form a sale contract rather than a legal settlement which is why I have long held the view that the reason they do not take any cases to court is because there are very strict laws regarding forming contracts that would not side well with them.
If adding sales tax in the US means they are trying the same thing then would that not strengthen the letter recipients position because any contract can be negotiated and a judge would surely not look favourably on a company threatening legal action to try to complete the contract?
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Oscar, I just need to say that I just love it when a lawyer uses the words "Getty" and "class action lawsuit" in the same sentence. 8)
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Good point, Stinger!
It could be even messier than "Getty" and "class action suit". The state of Texas would be in the unfavorable position of having to explain why they received sales tax monies for a settlement if it turns out to be illegal. Their rules are fairly specific and that cuts both ways. Some states have actually had their sales tax regulation shaped by class actions in the past.
Getty would be in hot water even if it's legal to collect sales tax in Texas for a settlement if it can be proven that they did so inconsistently. They were either obligated to collect sales tax for every settlement or obligated NOT to collect sales tax at all. They can't have it both ways. We've seen them make other mistakes, so it wouldn't be entirely out of the question that they're screwing this up.
Oscar and Buddhapi make a good point when they suggest that we could try to keep track of how consistent they have been with this practice.
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I just received another Getty extortion letter with a sales tax amount tacked on. This time it is from Colorado with a tax rate of 4% being added.
We now have a Texas letter with 8.25% sale tax and a Colorado letter with 4% sales tax.
I have a working theory of this new sales tax thing but I want to see if this is going out to most of the 50 states or not. I am not revealing my theory at this time until I have some confirmation.
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Thanks for the info, Matt. Quite interesting...
Here's some posts regarding the Irish VAT (tax) thing. Once contributor mentioned that:
"Getty are issuing invoices headed with a US address, posted in London, with no VAT number but charging UK VAT. It is illegal to charge UK VAT without a UK VAT number on the invoice. HM Revenue and Customs takes a very dim view of this kind of malpractice."
http://www.sitepoint.com/forums/printthread.php?t=390902&page=4&pp=25
Also, a refence to Irish VAT on this forum:
http://www.extortionletterinfo.com/forum/profile/?area=showposts;sa=topics;u=14570
Both posters had name "Ian", however, the dates of alleged infringement and the amount demanded by Getty differ.
Many other postings related to the Irish VAT here also:
http://www.startups.co.uk/getty-images-unlawful-use-of-pictures.html
Not sure if it's helpful in terms of the US, but it's interesting. Maybe some pieces of the puzzle are in there?
S.G.
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Here is a definitive list of what is required to charge VAT:
What a VAT invoice must show
A VAT invoice must show:
an invoice number which is unique and follows on from the number of the previous invoice - if you spoil or cancel a serially numbered invoice, you must keep it to show to a VAT officer at your next VAT inspection
the seller's name or trading name, and address
the seller's VAT registration number
the invoice date
the time of supply (also known as tax point) if this is different from the invoice date - see below
the customer's name or trading name, and address
a description sufficient to identify the goods or services supplied to the customer
For each different type of item listed on the invoice, you must show:
the unit price or rate, excluding VAT
the quantity of goods or the extent of the services
the rate of VAT that applies to what's being sold
the total amount payable, excluding VAT
the rate of any cash discount
the total amount of VAT charged
The Getty letter I have seen does not mention what rate of VAT applies, a VAT registration number or a sequential invoice number. They also don't mention the VAT for each item, just a total VAT with no VAT rate.
The letter is a couple of years old now so not sure if their practice has changed but if their letters are still unchanged I think we can see why no cases go to court here in the UK.
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I just received another Getty extortion letter with a sales tax amount tacked on. This time it is from Colorado with a tax rate of 4% being added.
We now have a Texas letter with 8.25% sale tax and a Colorado letter with 4% sales tax.
I have a working theory of this new sales tax thing but I want to see if this is going out to most of the 50 states or not. I am not revealing my theory at this time until I have some confirmation.
There are five states that don't collect sales tax:
http://www.bankrate.com/finance/taxes/states-with-no-sales-taxes-1.aspx
It must be noted that they find other, sneakier ways of collecting revenue. The other 45 are all over the place for the amount of tax imposed and the list of goods and services the tax would apply to. Colorado's rate of 4% seems pretty low compared to California and Texas, which are among the wealthiest states in the US.
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California, wealthy? We're broke. We keep kicking the can down the road every year and producing budgets that are pure fiction. http://latimesblogs.latimes.com/california-politics/2012/05/sp-issues-warning-on-california-finances.html
But we sure do get to pay a great sales tax rate: 8.25% statewide and 9.25% in Santa Monica.
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California, wealthy? We're broke. We keep kicking the can down the road every year and producing budgets that are pure fiction. http://latimesblogs.latimes.com/california-politics/2012/05/sp-issues-warning-on-california-finances.html
But we sure do get to pay a great sales tax rate: 8.25% statewide and 9.25% in Santa Monica.
OUCH. Almost double digits in Santa Monica, huh? I do realize California's pretty much broke, except "on paper".
San Diego has been nicknamed "Enron-by-the-Sea" for a decade now because our fine City Hall leadership pulled a total boner and put the city in the hole for more than two BILLION dollars by bilking the city employees' pension fund.
Kicking the can down the road is an art form perfected by San Diego since it became a City almost 100 years ago. The whole state is a total mess but of course the numbers are massaged to keep us sedated. According to KPBS, S&P is saying San Diego's happy times are here again:
http://www.kpbs.org/news/2012/apr/25/san-diegos-sp-credit-rating-improves/
Getting back to the original topic, I don't see how it's legal for anyone to charge sales tax for a settlement, as Oscar mentioned. It's not really a sale in the pure sense even though they require a "retroactive purchase" as part of the settlement.
Has anyone received an extortion letter in California with sales tax tacked on to the total amount? That would be worth a phone call to the State Board of Equalization's legal department to find out how legitimate such a practice would be.
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Almost from the beginning of this program, Getty has added VAT to the European extortion letters but I never gave it much thought because we don't get involved in cases outside the States and I just assumed it must be allowed on settlements as well. Maybe Getty saw how much extra cash it was raking in from VAT and decided to start a pilot program in the States. Wouldn't it be really interesting if we find a letter charging sales tax in one of the five states that don't collect sales tax?
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The NEXUS laws pertaining to sales tax collection must be paid to the state in which the business is conducted. For example, I am in Colorado and any sales tax that Getty tries to collect, must be paid to Colorado and they can only collect it if they have a business presence of some sort in Colorado and a proper Colorado sales tax license.
This should not be reported to Texas Dept of Revenue but to your respective state since they are getting cheated out of the tax money. Texas won't care as it is bringing in additional revenue from out of staters.
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MrNiceGuy, you're right about the NEXUS rules. The rules can vary though:
Here are Here are some cases in which a business might have a sales tax nexus in a state:
- If the business has a physical location in the state
- If there are resident employees working in the state
- If the business has property (including intangible property) in the state
- If there are employees who regularly solicit business in the state.
Source: http://biztaxlaw.about.com/od/glossaryn/g/nexusdef.htm
I really don't know how it works in Texas, but in California they would care. For instance, San Diego made a mistake and overcharged tax for a period of time before they were slammed with a class action lawsuit for enacting a tax that had not actually been qualified by the required percentage of the voters.
Then they had to LOWER the state tax for a while to "make up" for the extra revenue. They actually tried asking if they could keep the money (ha!) for something else that was nice and noble, but Southern California voters are quite the penny-pinching demographic and of course, they said NO.
In spite of all this sales tax rollercoasting and what are among the highest sales tax rates in the nation, California is skating on the very edge of bankruptcy, as McFilms noted earlier. They have some really nice public golf courses, though!