Thanks for the answers. I suppose I'll need to ask a local accountant.
Because I get the impression, that tax authorities keep themselves
busy with tracking their own citizen's money transactions, and don't
even try to do get foreigners to report to them.

So it looks more and more like I should be clear with my local laws
and authorities, and leave the rest of the world to mind its own
business.

Bill.

--
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On May 28, 4:21 pm, bill.valo...[at]gmail.com wrote:

- quote -

My guess is that it's perfectly OK, but you should get paid
professional advice to be sure. If you have a physical presence in a
state then you have to pay state income taxes in that state, as well
as federal taxes, and also obtain licenses -- city, county, state,
federal. If your web hosting server is provided by a third party and
is located in the US, like Daily Razor (http://www.dailyrazor.com/
about/about_us.php), that does not I think constitute physical
presence. Physical presence includes things like: where are the
warehousing facilities, where are the employees, where does the work
takes place.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On May 28, 4:02 am, "removeps-gro...[at]yahoo.com" <removeps-
gro...[at]yahoo.com> wrote:

- quote -

Bingo. Thank you very much for that. 1099-MISC is the golden keyword I
was looking for.

What I didn't find in the IRS' website, is what happens if the paying
company is not American. Is it completely an issue between the company
and its local tax authorities, or can the company find itself in an
uneasy situation if sums above $600 are transferred to an American?

Thanks in advance (again...)

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

bill.valores[at]gmail.com wrote:
....
- quote -


My understanding is each state has its own rules about what constitutes
legality in schemes such as this and depending on the rules of the
"competition" might (or might not) rule against it. In the particular
state in which I reside, there have been any number of similar-sounding
ideas floated as money-raisers, etc., that mostly have failed the test
for lotteries, etc., ... That doesn't say yours would; insufficient
information. But I'd not feel terribly confident you won't have
"issues" in various locales.

--

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On May 27, 9:30 am, bill.valo...[at]gmail.com wrote:

- quote -

Generally the person who receives prize money or goods must report it
on their tax return, line 21 ("Other Income"). If a US regulated
company pays more than $600 to any person, they have to issue a 1099-
MISC. I don't know if that rule is for wages only, or prizes as well.

- quote -

None I think, but could be wrong.

- quote -

It is allowed.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

Hello,

I'm considering to open an internet business, which would mainly
consist of a website. In order to encourage people to use the site, I
intend to offer money prizes (say, $100 or even $1000) to visitors in
some competition. This is not gambling, but rather users competing
against each other.

My question is: Am I expecting some tax-related legal difficulties? In
particular, if the company is registered outside US, but the money
goes to US residents -- any trouble? (And then we have this issue
about the web server being in the US...)

Or maybe put differently: Is it legal to put money in someone's hands
in the US, no questions asked?

I will be delighted if someone could point me to a clear official
document about this.

If you have information about other places in the world, that would be
helpful as well.

Thanks in advance,
Bill

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >