World Music - Part 3 of 4. Taxation without Representation

Once you’ve got the bulk of the artist’s visa work completed – then there are the tax implications to worry about.

Beneficial Ownershipp
First, and foremost, is determining to whom you will pay the artistic fee AND who is actually considered the “beneficial owner” of this payment. The beneficial owner is the person who ultimately gets to keep the money. Thus, a person receiving the funds (agent) strictly to pass this payment on to another person (artist) is not the beneficial owner. As the tax code changes so frequently, getting your organization and the artist's manager on the same page regarding taxation and beneficial ownership is a frequent challenge.

Most types of U.S. income, received by a foreign person, are subject to a U.S. tax rate of 30 percent. A reduced rate or exemption may apply if there is a tax treaty (see below) between the foreign person's country of residence and the United States.

Whether payment is made through a foreign or U.S. management agent, the foreign artist must complete a Form 8233, “Exemption From Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual.” A lovely form, which requires the performer to list all the visa details from their passport for the last several years. If the artist tours extensively – this can take forever.

Tax Treaties
The United States has entered into income tax treaties with a large number of foreign countries. Under many treaties, residents of foreign countries are exempt from U.S. income taxes with varying limitations and/or income thresholds. If a treaty exemption applies to a particular foreign artist you must indicate said exemption on Form 8233. However…

Individual Taxpayer Identification Numbers
A U.S.-issued Individual Tax Identification Numbers (ITIN) must be furnished on all returns, statements, and other tax-related documents (including the 8233!) ITINs may be acquired from the IRS by filing a Form W-7 with appropriate documents indicating identity and foreign status. A foreign artist must have a tax identification number to file an income tax return or to claim tax treaty benefits, including exemptions from foreign withholding. In other words, even if you have proved that the artist will NOT be required to pay taxes, they STILL need to get a taxpayer ID number to claim this.

Individual Tax Returns
A foreign artist paid by a U.S arts organization is considered to be “engaged in a trade or business” in the United States. Crazy as it seems, the foreign artist MUST file a Form 1040NR tax return, even if no income tax was required to be withheld.

And remember – ALL of this is simply to ensure the artist can legally perform in the U.S. There remains all of the other planning considerations required as with any artistic performance.

• Contract negotiation
• Technical rider review, negotiation, and adherence
• Grant work
• Arranging for or renting required technical gear
• Planning associated outreach or residency events
• Marketing and promotion
• Travel logistics to nearest airport and local transport service
• Lodgings and meals
• Reserving rehearsal time in your venue
• Hiring page turners, piano technician, IATSE workers, etc.
• Program design including program order, titling, program notes, biographies, texts, translations, and required grant or sponsorship language, etc.

Tune in later this week for the final installment: When in Rome…NY.

Again - please refer to the Artists from Abroad website. Artists from Abroad is made possible by the Association of Performing Arts Presenters, the American Symphony Orchestra League, and through a grant from the National Endowment from the Arts. Please also refer to the USCIS and IRS websites for more information.

Updates: addition of grant language, cleaned up some grammatical errors.