United States taxation and withholding of tax on foreign performing artists is a hot topic in the arts world today. The laws governing taxation and withholding are not new – they have been in place for many years. The general rule is that anyone working and earning compensation in the U.S. is required to pay U.S. income tax on those earnings.
Part of the buzz about taxation of foreign artists has been fueled by the IRS’s October 2007 announcement that it had launched a task force focused on “improving U.S. income reporting and tax payment compliance by foreign artists who work in the United States.” In effect, this translates to a crackdown on enforcement of the existing U.S. laws and regulations concerning taxation and withholding of tax on foreign artists. In early 2011, the IRS stepped up its enforcement efforts and began to send out "Directed Withholding Letters" to presenters, venues, and other performing arts organizations, directing these entities to withhold 30% of the gross compensation to be paid to particular foreign performing artists.
The information in this website is intended to be a practical guide to U.S. tax law and regulations governing the taxation of foreign artists performing in the U.S. At the outset, however, a few words of caution:
- This site includes much information, but it cannot address every specific scenario! In fact, the appropriate tax treatment for any particular artist is extremely fact-specific, depending on the artist’s country of residence, the amount of money earned by the artist in the U.S., and the artist’s status as an “individual” or “business” for tax purposes. The information included in this site is not legal advice. For advice on specific situations, contact a qualified tax attorney.
- This site addresses primarily foreign artists who are earning income for performing services in the U.S. as “guest artists”, who are “nonresidents” of the U.S. The tax and withholding requirements for those who are not nonresident performing artists, such as students and teachers, artists earning royalties, green-card holders and many others, may be very different from the requirements described in this site. Again, for advice on tax requirements for these individuals, consult with a qualified tax attorney.
 Generally, a foreign individual will be considered a U.S. resident if he or she (1) has a green card, or (2) meets the “substantial presence” test – meaning he or she has been physically present in the U.S. for at least 31 days during the current year, and 183 days during the three-year period that includes the current year and the two years immediately before (to satisfy the 183 days requirement, count all of the days you were present in the current year, and one–third of the days you were present in the first year before the current year, and one–sixth of the days you were present in the second year before the current year.)