US tightens up on non-resident taxation

November 2006

Arists, Live Music Industry

Audience (issue 80, October 2006) reports that the US Internal Revenue Service may ask bands to withhold thirty percent of tax on tour personnel as well as on their own artist earnings. This comes at a time when venues and promoters are being told they may be held liable for taxation if a non-resident artist has not filed a Central Withholding Agreement (CWA). The IRS has published a new guidance, Non-resident alien US income and payroll tax responsibilitieswhich now provides for a direct responsibility to withhold 30% of tax on tour personnel. Whether or not this offends international bi-lateral tax treaties may have to be tested in the US courts but the IRS maintain that without a CWA tour personnel may have a US tax liability and the withholding tax is in place to collect this. Tour personnel could then apply for a tax refund under the US system utilizing relevant double taxation treaties.

Audience (issue 80, October 2006)

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