Posts Tagged ‘tax obligations’

Paying By the Numbers

Thursday, October 15th, 2015

By Brian Taylor Goldstein, Esq.   

Dear Law and Disorder:

A presenter is refusing to pay one of our artists who has an O-1 visa, but does not have a Social Security Number. Does a foreign artist who is performing in the U.S. under an O-1 also have to get a Social Security number in order to get paid?

Many presenters and venues—particularly those affiliated with university or other academic institutions—have an affinity for imposing arbitrary policies and procedures and insisting that they are legal requirements. To be fair, many of those presenters and venues are merely passing along edicts that have been dictated to them by other departments and offices within their labyrinthine institutions who are more familiar with hiring snow plow services than with engaging non-U.S. artists.

Non-U.S. artists are not required to obtain anything other than an appropriate artist visa (usually, but not always, either an O or a P visa) in order to be authorized to perform legally in the U.S. Whilst it is not uncommon for presenters and venues to insist that a non-U.S. artist have either a Social Security Number (“SSN”) or the SSN’s evil twin, an Individual Taxpayer Identification Number (“ITIN”), as an additional condition for an artist to be paid, that is not a legal requirement. More often than not, it is merely a requirement of the presenter or venue’s finance department or booking software which cannot physically write a check without having either a SSN or ITIN. Provided the artist has an appropriate artist visa, he or she is legally permitted to be paid and, unless there is an express contractual provision to the contrary, the presenter is legally required to honor an engagement contract and to pay the artist for services performed.

SSNs and ITINs have absolutely nothing to do with work authorization or immigration law. Rather, they are creatures affiliated with U.S. tax obligations and tax returns. An artist will need either an SSN or an ITIN to file a U.S. tax return, which artists are required to do—especially if they want a refund of any engagement fees that might have been subject to 30% withholding. However, if the artist elects not to file a U.S. return and just let the IRS keep their money, that’s entirely at the discretion of the artist. The failure or an artist to have a SSN or ITIN cannot be used as an excuse by a presenter or venue to pay the artist or otherwise honor a valid engagement contract.

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For additional information and resources on this and other legal, project management, and GG_logo_for-facebookbusiness issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.com

All questions on any topic related to legal, management, and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously and/or posthumously.

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THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

Student Visas: A School for Scandal?

Wednesday, May 8th, 2013

By Brian Taylor Goldstein, Esq.

Dear Law and Disorder:

May a non-resident alien (Russian) musician here for an advance graduate school degree on an F-1 visa be paid for playing some off-campus recitals? Are they considered “Curricular Practical Training” which is supposed to be allowed, if approved by the Designated School Official? (Of course, 30% of the gross fee would have to be withheld unless a CWA is obtained.) Thanks for your advice!

A lot of schools, universities, and conservatories are all too happy to accept foreign students without really explaining that their ability to “work” in the US during their studies, much less remain long enough after graduation to establish careers in the US, is very limited and restrictive. (Remember, as it applies to artists, the twisted tomes of US immigration law define “work” as any performance in front of an audience regardless of whether or not tickets are sold or the artist is paid.)

While obtaining authorization for a foreign student to perform concerts and recitals on-campus is fairly simple, performing concerts and recitals off-campus can be a bit much trickier. One of the ways foreign students can be granted authorization to perform concerts and recitals off campus is to be approved for Practical Training. Foreign students are eligible for Practical Training once they have been enrolled for at least one academic year (nine months). There are two types of Practical Training: Curricular Practical Training (CPT) and Optional Practical Training (OPT).

CPT includes programs that are an “integral part of an established curriculum.” That is, the off-campus concerts and performances must be associated with the school’s established curriculum and must be an integral part of the student’s degree program. While it is completely within the discretion of the school to determine what qualifies for CPT and what constitutes “an integral part of the student’s degree program,” CPT programs are typically listed in the school’s course catalog with the number of credits included and the name of a responsibility faculty member. CPT programs typically include work/study, internships, or any other type of required internship or practical performance experience which the school believes is necessary for the student’s degree or course of study.

OPT, by contrast, is not tied to the curriculum (though it is supposed to be “related” to the student’s field of study) and can be used for up to a year full time (two years part time) on campus or off campus. OPT can take place either before graduation or in the year following graduation. OPT that takes place before graduation can only be used for up to 20 hours per week during the school year (though full time work is permitted during holidays and vacation periods if the student applies). After graduation, the employment can be full-time. Post-graduation OPT must be completed within 14 months of the student’s graduation. A student can have OPT for a maximum of twelve months after graduation.

A note of caution: while students may take an unlimited amount of Practical Training, if they take more than a year of CPT, they are barred from seeking OPT. This can be critical because the OPT may be a student’s only opportunity to perform professional engagements in the US after graduation. As USCIS discourages students from switching easily from F-1 classification to O-1 classification, any hope of doing so usually rests with what the student is able to do during their year of post-graduation OPT. Total CPT up to 364 days or less will not result in the loss of OPT. However, part time work using CPT for more than a year has been deemed to result in the loss of eligibility for OPT. In short, avoiding the loss of OPT eligibility requires both good record keeping of the time spent performing on CPT as well as a lot of math!

In your case, assuming the Designated School Official (DSO) approves the student’s request to perform the off-campus recitals, the DSO will enter the information in SEVIS and print out an I-20 with the CPT authorization for the student. The DSO is required to sign and date the I-20 prior to returning it to the student. While no employment authorization document from USCIS is needed for curricular practical training, the student may not begin work using CPT until getting the endorsed I-20.

So long as a student is approved for either CPT or OPT, then, yes, the student can be paid. However, while your willingness to acknowledge US tax-withholding obligations is both rare and commendable, it may be premature. First, Russians belong to a small list of countries from whom no withholding is required because all money earned by Russians nationals in the US is tax exempt. However, this changes if the Russian is considered a “resident alien” for tax purposes. Second, just because a student (or anyone, for that matter) is a “non-resident” for immigration purposes, doesn’t mean they are a “non-resident” for tax purposes. It all depends on how much time they spend in the US each year. As with all foreign artist tax matters, it’s a very fact specific analysis. Assuming your student in approved for CPT, then I would strongly recommend you consult with an expert in foreign artist taxation to determine the student’s specific withholding and tax obligations.

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For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!

Another Taxing Question

Wednesday, March 13th, 2013

By Robyn Guilliams, Esq.

Dear Law and Disorder:

There seems to be some clarification needed regarding income earned by non-US artists we represent who perform in Canada. We act as the agent for the artists, so payment is always made to us.  If an artist will be performing in Canada, but payment comes to us in the US before it is sent to the artist, is it still subject to US withholding (potentially 30%)? If an artist earns money in Canada and the payment comes to us as agent for the artist does that income get recorded in the 1042S that we provide the artist at the end of the calendar year? I am hoping you can provide me with an answer that I can forward on to my colleagues. Thanks, you guys are great!

The 30% withholding rule is applicable only to payments of “US source income”.  For compensation of personal services (e.g., fees earned by artists for performances, master classes, etc.), the test of whether or not the fees are “US income” is the location where the services are performed. Fortunately, this makes it easy to determine when the 30% withholding rule applies! IRS Publication 519 states that:

If the income is for personal services performed in the United States, it is from U.S. sources. The place where the services are performed determines the source of the income, regardless of where the contract was made, the place of payment, or the residence of the payer.

So, your nonresident artists who perform in Canada (or any other country outside the US) are NOT subject to 30% withholding. They are subject to tax and withholding in the country in which the services are performed. Even if payment for a Canadian engagement comes to you in the US, that payment will be considered non-US income, it is not subject to 30% US tax withholding, and it is not reportable on a 1042-S. However, while your artist won’t have any US tax obligations for the Canadian engagement, he or she may be subject to Canadian withholding and tax.

__________________________________________________________________

For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com

To ask your own question, write to lawanddisorder@musicalamerica.org.

All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously.

__________________________________________________________________

THE OFFICIAL DISCLAIMER:

THIS IS NOT LEGAL ADVICE!

The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!