Orange County Tax Lawyers Help International Artists to Meet International Tax Obligations
October 3, 2016
Unless you’re something of a tax enthusiast, you’re probably not clear about what central withholding agreements are and whether or not you need one. That’s why it’s essential to work with experienced Orange County tax lawyers, especially if you happen to be an international artist, performer or athlete.
Central withholding agreements, or CWAs, are part of a program devised by the IRS to help non-resident aliens comply with their U.S. tax obligations. For instance, if you’re a British rock star who will be performing a series of concerts in America or a Brazilian soccer player who is part of a U.S. team, then the money you earn while you’re in the states might be subject to income taxes. The CWA program is designed to ensure the correct application of tax laws and to make certain that non-resident aliens are treated consistently across the board.
Setting up a CWA requires three parties: the non-resident performer or athlete, an authorized representative of the IRS and a designated withholding agent. Each CWA relates to specific performances or events, with the pertinent withholding being calculated based on variables like budget and estimated profits. As part of the CWA, the artist or athlete agrees to file any necessary tax documents and pay any prior, unpaid federal taxes.
Not many years ago, the IRS was fairly lax about getting CWAs from non-resident aliens who were performing or competing in the U.S. That has changed radically, with the agency sending field agents to concerts or music festivals to demand tax payments based on gross receipts for the event when they know or suspect that a CWA is not in place. In less dramatic fashion, the IRS can request that the concert organizer or promoter withhold what they believe to be the appropriate amount. This can be applied to not only the fees for the performance itself, but also to merchandise sales.
The Orange County tax lawyers at Fitzgerald Yap Kreditor are prepared to help international athletes and entertainers who are working in the United States. Contact our offices at (949) 788-8900 to learn more about central withholding agreements.
