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ACX to Roll Out Tax Cover Letters per AG Suggestion

The Authors Guild is pleased to report that Audible’s Audiobook Creation Exchange (ACX) will be issuing a tax cover letter with its 1099-MISC forms for rightsholders in the Royalty Share program this year, as we had requested after authors reached out to us with questions about last year’s changes to ACX tax reporting. ACX informed us of this decision ahead of the expected rollout of the tax forms on January 26, 2023. The cover letters will contain breakdowns of amounts paid to producers and will help authors and other rightsholders better manage their tax records and returns.

We suggested ACX include tax cover letters with its 1099-MISCs during our discussions with ACX leadership concerning their decision last year to stop issuing separate 1099-MISCs to producers. Instead, ACX started reporting the total net earnings from audiobooks—i.e., the royalties paid to both authors/rightsholders and producers—on authors/rightsholders’ 1099-MISCs. As a result, authors would have to deduct their producers’ shares from the net earnings reported on their 1099-MISCs, even though the producers’ shares were paid directly by ACX. It was not immediately clear to authors how they would deduct the amounts paid to producers as business expenses, how they would determine the amount paid to producers, or whether they would be required to issue tax documentation (such as 1099-MISC forms) to producers.

The Authors Guild approached ACX with these concerns and also consulted with an independent tax advisor. In response, ACX expanded its tax FAQs, and, separately, the Authors Guild released its own FAQs to clarify the tax consequences from the change on authors/rightsholders. At the same time, we conveyed to ACX our tax advisor’s suggestion to include a cover letter—much like literary agents do when reporting book royalties—that breaks down the producers’ share and the authors’ share, giving authors a handy and convenient record of their exact income and the exact amounts ACX paid out to their producers. ACX took our suggestion into account and has now implemented the process to provide these cover letters for the 2022 tax year.

We are grateful to ACX’s leadership for listening and responding to our concerns and for making these helpful changes to their tax reporting process.