Don’t Surrender To Tax Treaties

Presenting artists from other countries is very exciting. It allows you to provide your audiences an experience they can not get anywhere else in the country. Since the governments of other countries frequently subsidize tours by their resident artists, presenting these performances can be quite affordable.

What may not seem so exciting or affordable is resolving the issue of the 30% withholding tax that is assessed against foreign artists, especially when you learn that everyone along the payment chain, from the artist to the agent to your organization can be liable for paying the 30%.

What 30% That Is Insane!

To set your mind at ease, the artist isn’t necessarily losing that 30%. They get taxed at the same rate as any U.S. individual or business so if they only owe 15% of their income, they will get the other 15% back if they file. The maximum is withheld since it is difficult to collect taxes from someone overseas.

The League of American Orchestras and Association of Performing Arts Presenters have partnered to create the website Artists from Abroad which provides information about tax withholding and immigration procedures for foreign artists.

There are a number of situations in which you won’t have to concern yourself regarding the withholding. One of the obvious ones is if the artist(s) perform in the U.S. so often that they have incorporated and have a U.S. taxpayer i.d.

Others mentioned on the Artists from Abroad site are:

Compensation that is exempt from U.S. income tax by reason of a tax treaty;

Compensation that is exempt from U.S. income tax because it is earned by an organization that is tax-exempt in its home country;

The foreign artist enters into a Central Withholding Agreement with the Internal Revenue Service; and

Compensation that is subject to withholding under Section 3402 (“graduated withholding”) and the regulations under that section (this applies only if there is an employee/employer relationship).

Closer Look At Tax Treaties

In a situation where there is no agent or manager to handle the withholding arrangements, or if you lack confidence in the agent’s assurances, you might decide to consult an attorney. Since the IRS provides all the U.S. tax treaties online (summaries may be found here) your attorney may go there to research the matter.

I should be noted that the treaty is based on country of residence, not citizenship so a German citizen living in London would fall under the treaty with England.

Mass-Confusion

What the Artists From Abroad site doesn’t talk about is how to read those treaties. This issue cropped up for me with an artist from New Zealand over a passage in the treaty. The artist had filed the proper paperwork for the exemption, but the tax people in my organization were saying it wasn’t valid according to their reading of the following:

“The business profits of a Contracting State shall be taxable only in that state unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the business profits of the enterprise may be taxed in the other State but only much of them as is attributable to that permanent establishment. “

Even in the context of the whole treaty, it is pretty confusing.

Fortunately, the IRS Central Withholding Office provided clarification which they have given me permission to share.

In the following, “business entity” refers to a production company or other type of operation which owns the rights to the production and performances being presented. The presumption here is that the artists/performers are either employees or contract players for the business entity, having no ownership interest or risk from loss in the production, thus making the business entity, rather than a venue or other payer, the withholding agent for payments to the artists. Payments to these performers would be subject to rules, regulations, and treaty considerations for the individuals as artists. The business entity may apply for a tax treaty benefit with regards to payments made to the business entity if the business entity is permanently located in a country that has a tax treaty with the United States.

A valid withholding certificate, W-8BEN, presented by the business entity to the venue is used to claim a tax treaty benefit for Business Profits. CAVEAT: The business entity MUST have a US Employer ID Number on the form W-8BEN to qualify for the exemption, otherwise 30% of gross income is required to be withheld and deposited with the US Treasury on behalf of the business entity.

Tax Treaties between the US and other countries are worded so that each country reads it and approaches it as a reciprocal agreement. In each case, the “Contracting State” is the country of residence of the business entity and the “other Contracting State” is the country in which they are performing services for remuneration.

Therefore, a US business entity applying Article 7 of the US-NZ tax treaty would use the US as “Contracting State” and New Zealand as the “other Contracting State” thereby claiming exemption from tax in NZ but being subject to full taxation in the US. The business entity could not claim exemption if they had a permanent establishment in NZ.

SIMILARLY, the NZ business entity would flip-flop the terminology taking NZ as the “Contracting State” and the US as the “other Contracting State” thereby claiming exemption from US taxation and subjection to full taxation in NZ. The business entity could not claim exemption if they had a permanent establishment in the US.

As a result, a non-resident alien business entity as described above will provide to the venue a Form W-8BEN claiming the business profits tax treaty provision. The venue is relieved from any withholding responsibilities for payments to the business entity.

The business entity is still required to withhold and deposit on any payments made to or for the benefit of the actual performers.

For the withholding requirements on the individual non-resident alien artists or athletes, you may contact the IRS at CWA.Program@IRS.gov

This issue is such a confusing one for people who don’t deal with it on a daily basis that I have kept this letter from the IRS as something of a talisman to be used in conjunction with the Artists from Abroad site every time the subject of withholding arises.

A Little Bird Told Me: Twitter Analytics

Did you know that you can access analytics about your Twitter followers, impressions and engagement, for free, right in your own profile? Twitter sure doesn’t make it obvious unless you’re already using Twitter ads / promoted tweets.

But even if you’re not planning a paid campaign on Twitter, you can still access analytics for organic tweets by “signing up”. You’ll only get impression data for tweets made after you sign up (lack of historical info seems to be a new development), but there’s still a wealth of information to be gleaned about your existing followers.

To get started, visit http://analytics.twitter.com while logged in to your Twitter account. You’ll be prompted to set up your payment account and start a paid campaign immediately, which you could do if you want to dip your toes in those waters; actually running a campaign is optional, though.

You’ll need to post a tweet or two before you start seeing data, but take note of the “Export data” button on the right side of the Tweets page. Hit this to download a .csv file that lists activity (retweets, replies and favourites) for all your tweets going as far back as October 2013, depending on how much you tweet. It will even show you the exact minute the tweet was posted, for those that are interested in see what time of day your tweets do best. (Hint: you should be interested.) Impressions and some other stats won’t have historical data, but should populate going forward now that you’re signed in.

Once you have data, clicking on a individual tweet shows you even more granular information.

Detailed stats for individual tweets.
Detailed stats for individual tweets.

Click on “Followers” at the top of the page to see a demographic analysis of your followers – from location, to interests, to which other accounts your followers are also following. Might be nice to know which local media outlets your followers prefer (at least on Twitter), right?

Demographic information about your followers.
Demographic information about your followers.

Of course, with great power comes great responsibility lots of follow-up emails from Twitter encouraging you to spend money on advertising. Whether or not you choose to go down that road, Twitter Analytics is a powerful tool that could very well change the way you tweet.

Get To Know ArtsHacker.com

Today marks the launch of ArtsHacker.com, a site dedicated to providing practical tips, tricks, and pointers for getting things done as an arts manager.

ArtsHacker is the result of good old fashioned necessity; up until the time of its launch, the field of nonprofit performing arts administration has been awash in a sea of theory and visioning. There are new models aplenty and regardless of their value, they don’t amount to a hill of beans without implementation.

Simply put, forget the conceptual stuff, people just need to get stuff done.

As a result, ArtsHacker is designed to fill this void by providing high quality nuts-and-bolts oriented content from a broad cross section of contributors; each with unique skills sets, experience, and areas of expertise.

Nickle Tour

We’ve got all sort of goodies built into the site, to that end, here is an overview of items you don’t want to miss.

  1. Meet the Contributors: we’re nothing but empty calories without the terrific content generated by the ArtsHacker contributors so take a moment to learn who they are, their focus areas, and bios.
  2. Take-a-hack, Leave-a-hack: it’s exactly what it sounds like; a dedicated portal to request a topic or offer up a tip. You can find it in the right sidebar or footer area depending on which device you use to access the site.
  3. Subscribe: you have two options for making sure you never miss an arts hack, sign up to receive per post email notices if you prefer to know the moment a new article goes live or subscribe to the weekly email summary, which goes out Friday morning and contains an overview of the week’s posts and comments.
  4. Index: we make it easy to find specific products and/or services you’re curious about thanks to a handy index. Be sure to check in frequently as new items are added on a regular basis.
  5. Category Navigation: if you’re on a desktop or laptop, you’ll notice a sticky navigation menu in the left hand column; think of it as your topic speedpass. If you’re using a tablet or Smartphone, just tap the toggle at the top of the screen to access the menu.
  6. Advanced Search: if you want even more control over finding content (this will be especially handy as time marches on and the archives grow), the advanced search feature will let you filter your hunt by specific categories and tags (index items) as well as keywords.

FAQs

  1. How often are articles published?
    Although it isn’t written in stone, we’re going to begin filling out the site for the first few weeks with at least one post per day.
  2. What type of content can I expect?
    We separate our posts into two types: original and aggregated content. Think of the latter like a curated offering that our contributors help connect to specific areas of arts management.
  3. Can I become an ArtsHacker?
    Perhaps. Stop by the Prospective Contributor FAQ page for info and an application.
  4. How do I contact a contributor?
    You can either use the general contact form and we’ll forward it to the appropriate ArtsHacker or you can use any of the info each respective contributor has listed in his/her bio.
  5. Can I leave comments?
    Absolutely, we encourage readers to interact with contributors and one another via comments as well as sending in requests for future hacks. For more information about our comment policy, please read our Terms of Use.
  6. Your contributors are brilliant! Can I hire them?
    Quite possibly. Many of ArtsHacker’s contributors are available to help you or your organization via an independent service provider agreement. ArtsHacker is not part of any service provider agreements you enter into with our contributors and there is no joint venture between any contributor and ArtsHacker.
    ArtsHacker is not a re-supplier of services provided by service providers. Service providers are independent contractors and are not our employees, sub-contractors, partners or agents. We provide a way for you to reach out to each contributor but we do not provide any direct services.
  7. Besides email subscriptions, how can I follow ArtsHacker?
    We’ll do our best to post every new article at our social media profiles along with additional site news and special announcements.
    Facebook
    Twitter
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    RSS Feed
  8. Who owns ArtsHacker?
    ArtsHacker is founded and operated by Drew McManus LLC; Mr. McManus also serves as editor-in-chief. All content on this web site, such as text, graphics, logos, button icons and images is the property of Drew McManus LLC and/or the article authors.
  9. Is it ArtsHacker or Arts Hacker?
    ArtsHacker.

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