In brief, we have conducted a thorough analysis of the U.S. Tax Code, and believe that it is our obligation to ensure that each of our non-U.S. artists has proper ITIN documentation in order to extend treaty benefits to them. A more comprehensive, and technical, explanation of our reasoning follows:

Our analysis of non-resident alien (NRA) withholding requirements under the U.S. code obligates TurboSquid, as a party to the process by which payments are made between buyers and sellers of our products, to withhold monies from sellers and deposit these monies with the IRS in satisfaction of potential U.S. income tax obligations. The provisions of the Tax Code could be interpreted to characterize the nature of TurboSquid's payments to our NRA sellers for their U.S. Source income as "Royalties," as that term is defined in the Code. As a payer of royalties to an NRA, TurboSquid could be characterized as a Withholding Agent under the Code and could be held liable for the unpaid tax obligations of its NRA sellers, as could the NRA sellers themselves.

Again, we sympathize with any of our artists who are annoyed about having to go through this process in order to enjoy tax-reduced or tax-exempt status, but we have spent a great deal of time investigating a very complicated and confusing tax code, and based on our findings and the advice of experts, we have decided that these steps are necessary in order to be in full compliance going forward. TurboSquid has always had similar withholding and documentary requirements for its U.S based artists; we are simply applying the same standard to our international sellers. Again, we are only trying to ensure that we are properly withholding on the seller's behalf.