Fees & Taxes

Money Matters

Fees

Creating an artist profile page is free. Signing up as a fan is free. There are no fees for maintaining either an artist profile page or fan account.

Using PayPal, ScratchBang creates a recurring monthly payment from the fan to the artist. Fees are charged for each monthly payment based on these percentages: PayPal micropayment processing, 6% (estimate); ScratchBang operations, technology, 14%. A full 80% of each fan's payment goes to the artist. Subscription payments are credited to the artist throughout the month, depending on the fans' subscription schedules.

For monthly payments less than $5.00, the 80/20 split is the same; however, the fan covers an estimate of the PayPal processing fee, which is a larger percentage at lower dollar amounts. For example, if a fan wishes to subscribe for $1.00 a month, the artist will receive $0.80 (still 80%), but the fan will be charged $1.11. The adjusted payment amount is shown during the subscription process and requires confirmation and approval by the fan.

For monthly payments of $5.00 and above, the PayPal processing fee is included, with no adjustment to the fan's payment.

The payment processing percentage may be lower for larger individual subscription amounts. International payment processing fees may be higher.

Year-End Artist Reward (YEAR)

At the close of each year, we'll see how much extra money is stacked up and we'll pay it back to active artists who have been on ScratchBang on or before July 31 of the year.

What extra money? If we all have a good year, then we'll all have a good YEAR, too. A Year-End Artist Reward is possible if our payment processing expense estimate was too high or if our revenue from ads or merch was higher than expected for the year. We'll check the YEAR numbers at the end of the year, calculate the amount of the reward, and contact all eligible artists with the results in early January. Keep your mailing address up to date: writer's cramp permitting, the YEAR payouts will be made by check and mailed to you.

Your YEAR will be based on a percentage of the subscription payments you received during the year. If you're a new artist on ScratchBang during the year, you'll need to have at least one subscriber before the end of July. If you join ScratchBang after July, then you won't qualify for that year's YEAR, but your year for your YEAR will be the following year.

Taxes

Artists, consult with your tax advisor. Tax law can be confusing, and what applies to payments from activities on a particular funding site may not apply to ScratchBang. It's best to talk through your unique situation with a competent tax professional.

Artists outside of the United States, please consult with your local tax advisor. In the EU? Please see European Union VAT below.

For artists in the U.S., here are some questions to get your tax conversation started:

• Can you help me figure out how to handle payments I receive on ScratchBang with regard to my future income tax returns? ScratchBang is a platform where fans purchase subscriptions to artists and get access to the artists' subscriber-only page. It's not a marketplace for my goods or my services.
• Are the subscription payments that I receive from fans considered part of my gross income or are there exclusions that might affect me?
• How does the IRS define a gift and how does that definition affect whether or not payments to me are taxable? What's the annual exclusion and does it affect my situation?
• The IRS says this about gifts, "You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return." I'm not selling products or offering rewards on ScratchBang, so are subscription payments I receive considered gifts to me?
• Are there any limits to gift amounts?
• If payments I receive are taxable income, how should I account for that? ScratchBang does not report any income information to tax authorities.

Check with a tax pro! (That's in bold red because we really mean it.)

Artists, one more thing: If you collect at least $20,000 and over 200 payments during the year, PayPal will send you a 1099-K form showing the total of the year's payments. The 1099-K goes to the owner of the PayPal account you linked to ScratchBang. The form does not necessarily show the amount of taxable income. In all cases, you'll find your ScratchBang payment details in your PayPal account history at paypal.com.

European Union VAT

The European Union VAT law changes that went into effect in January 2015 would require that ScratchBang collect VAT on behalf of artists based on their fans' locations in the EU. There are onerous data collection, data retention, and processing requirements that do not work with the PayPal-based payment processing that ScratchBang uses. And unlike with physical product sales that have a high minimum threshold before VAT needs to be paid, the new law requires VAT payments for all digital services payments, regardless of amount. That means all payments from the EU are affected.

Because of the current VAT requirements, and with much regret (and frustration), ScratchBang has configured PayPal to decline payments originating from the 28 EU countries. We're sorry that ScratchBang isn't currently available for artists and fans in Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.

Idaho is not affected.

If you want to dig into the problems surrounding the VAT changes, a good place to start is the EU VAT Action Campaign site and its Update and FAQ pages.