This is a general briefing guide to some of the problems that can be encountered when touring the USA, in particular, the US Centralised Withholding Agreement (CWA) arrangement for managers of UK acts who intend to tour the USA. It is a practical guide and not a definitive statement of practice or the law. The practice of the law in respect of visas, taxation and CWA’s is constantly changing depending on all number of circumstances. Before embarking on a tour in the USA it would be prudent to take advice from someone experienced in the areas of law concerned. Prager and Fenton are unable to take any responsibility for any action or lack of action taken in respect of the information and guidance contained in this briefing guide. This Briefing Note updates some information previously published in 2012.
A couple of events have happened since our last Briefing Note:
First, there has been the unsettling experience of Snow Ghosts on their way to SxSW 2014. The band was turned away by US immigration because their visas were not compliant. However, some press reports do not appear to have been reliable as to the law on this matter. We, therefore, spoke to US immigration lawyer Paul Samartin, who had the following to say:
The hard truth is that there is clear guidance on travel to the US on the VWP for a musician and that most, if not all, of the performers, would need work authorized visas (either P or O visas) to perform at SxSW. Under the Department of State’s Foreign Affairs Manual (found at 9 FAM 41.31 N11.3 and N13.7 and attached, see the highlighted sections), which covers tourist and business travel identical to VWP travel to the US, a B visa (or VWP travel) is not appropriate for members of the entertainment profession (ie professional actors, musicians, etc) who are going to the US to perform, even if the performers will not be paid for the performance. However, amateur entertainers (ie those who are not members of any profession and/or do not normally perform for remuneration) can enter the US to perform in a social/charitable context or as a competitor in a talent show or contest provided that no compensation is received. I sincerely doubt that many of the SxSW performers are amateur entertainers who would qualify under the latter category. There are some other provisions in the FAM that discuss allowable activities by professional musicians/performers but none are applicable (recording in the US but only if the work will be sold outside the US is okay (no public performances are allowed though), performing in cultural exchange activity paid by foreign government is okay, etc).
Paul is happy to discuss visa issues with prospective visitors to the USA and can be contacted at Laura Devine Solicitors at email@example.com
Canadian Withholding Tax
Secondly, our New York office can now deal with both the US and Canadian withholding tax applications – making touring a little bit easier in North America.
SxSW Storing Up Trouble For Next Year
Thirdly many bands and artists think that if they do not personally get paid for a gig in the USA, it doesn’t count as far as the US tax authorities are concerned. Artists who received funding for their appearances at SxSW may not have been paid in the sense that they personally received no remuneration but if their expenses were paid for by someone else, they are nevertheless still in receipt of income for the performance. It doesn’t matter who funded the appearance, it’s treated as income for the show.
Where an artist performs at SxSW (or anywhere in the USA for that matter) and does not file a US Income Tax Return for that US tax year, then in later tax years they will not be eligible for a CWA – Central Withholding Agreement. Without a CWA, the tax will be deducted at source at 30% of gross income instead of a lower negotiated rate with respect to future tours in the USA.
We are looking at how we can help SxSW attendees with a cost-effective solution to this problem so do contact us to see if we can help avoid problems in future years. Of course the Tax Return for this year’s performance at SxSW may well show a loss but this is a loss that can be carried forward and used against US tax in later years. So it’s not a completely useless exercise.
For further information contact:
Chris Hull – Partner, New York
Maria Lopez – Tax Supervisor, New York
Hal Peterson – Partner, New York
Simon Winters – Partner, London