Okay as promised, I took notes at the international tax session at the WAA conference. It was actually a hot topic. The session was scheduled for about 1.5 hours but at the end of the time it ended up moving to another room and continuing. (I moved on to a grants session because I had notes on 90% of what I wanted to know.) Then the discussion apparently infiltrated an Arts Presenter’s session as well.

The speaker at the session was Stanley E. Majors: Attorney, Fettmann, Tolchin & Majors, P.C.. (CPA and Tax Attorney licensed to practice in DC, MD and VA)

Among the things I learned was:

-Tax treaty is determined by place of residence. A French national residing in Switzerland falls under Swiss treaty.

-Everyone in the payment chain-presenter, agent, manager, etc can act as the collection agent of the 30%. The IRS typically starts at the end of the chain with the last person to handle the money before the artist gets it when researching if the money was collected. Mr. Major’s suggestion was to put something in the contract that stipulates who will be the party responsible for withholding. Obviously, many of the presenters’ preference would be for the agent or manager to be the responsible one.

Though empowering everyone in the chain to collect the tax looks like the IRS is just increasing the number of people they can blame, Mr. Major assured us that it wasn’t the case. Nor is it so they can collect the tax multiple times.

-The Alien has to fill out a certificate 8233 to claim exemption if they feel they are entitled to keeping their 30% The IRS has 10 days to agree with the exemption or not. A presenter can not make a decision to withhold or not unless they file. (For example, if you have someone coming in for 1 day and they are making $1000 to speak and then leaving the country and you know they fall below the exemption threshold, you still can’t exempt them unless they file.)

-If you know that a person has falsely filed an exemption, you have to withhold. You don’t necessarily have to research their entire tour schedule, but if you know that they are performing in a city south of you one night and a city to the north of you the night after for the same rate they are charging you and it exceeds the exemption amount and they file an exemption, you can’t accept it.

-Article 16 or 17 of the tax treaty is where the pertinent info is usually found. (For tax treaties, a good place to start is this IRS webpage. It contains links to more specific information, including the treaties, as you find you need it.

-This restrictive clause in the treaties only applies to performers and athletes. Their managers, lighting people, make up people, etc fall under a more liberal portion of the treaties. Apparently, the US actually wants people to come to the country and do business and the more liberal portions reflect that. The restrictive portions are to prevent people like the Rolling Stones from coming in, making millions of dollars and leaving. Unfortunately, since the Rolling Stones are making millions of dollars, they aren’t hurt too much by it, but the smaller folks are.

-Just like US citizens, the alien can get a refund by itemizing their operational expenses on a 1040NR at the end of the year.

-I spoke to Mr. Major specifically about a South African group with incorporation
and Fed. tax number in the US and his opinion was that the taxes didn’t need to be withheld since they are 1) obligated to file corporate tax returns every year 2) the IRS can exert enforcement powers if they lie, especially since so much of their income is derived in the US. (Which is probably why they incorporated in the US in the first place–to avoid the bite) Of course, to get him to issue an opinion the IRS would care about, I assume we would have to pay lots of money.

-If a foreign group claims to be a non-profit organization similiar to 501 (c) (3) in the US, you can request that the IRS make a determination if the organization meets the same criteria as a US non-profit.

That is about everything I learned. The one thing I didn’t note was whether you treat a group as 1 entity earning 10,000 or 10 people earning 1,000. I am told he covered that in a later session on the same topic so I am inquiring if a colleague took notes specifically on that since that was an area of concern for her.

Well I have returned from Spokane, WA a bit older and wiser for the experience. There was plenty that happened so I will have ample fodder for posting. Unfortunately, the amount of work left undone while I was away may keep me from my posting. We shall see.

Let me first start by saying Spokane is a lovely city is walk around, especially near the convention center which is right on the edge of a park where Expo 1974 occurred. The conference itself was well organized and there were some procedures that had been adopted that went over very well with the membership–but more about that in a later entry.

I ended up learning quite a bit, but I was concerned that wouldn’t be so when the conference first started (and not just because of my articles on useless meetings, part 2 here). The keynote speaker was Gunther Schuller who has had a long career as a musician and has certainly shown his love and stamina for his craft (he apparently would play in an orchestra for an opera and then walk into a jazz club to continue playing into the night.) However, in my estimation, he really has no concept about what it takes to run an arts organization.

I was really rather angry at the conference coordinators for picking him and had to resist an outburst at various times during the week when I came in contact with them. (I will avail myself of the feedback forms they provided, however, and probably won’t be any more diplomatic than I will be here.)
It was probably the worst example of many of the things I have railed against the arts community over in prior posts.

His whole speech was about how great the good old days were. He didn’t say anything I didn’t know 20 years ago. He cited the miniscule proportion the NEA budget has to the entire federal budget. He spoke of low listenership and programming of classic music on radio stations and lauded NPR for having the courage to play the music. Pop music and network television are the enemies leading to illiteracy and the destruction of culture. It is a terrible thing, he says that Hootie and the Blowfish get to be on the talk shows and Beethoven is no where to be seen. It was all doom and gloom and really just very old news.

It all may be absolutely true, but nothing he said acknowledged the fact that this was the environment in which arts organizations operate today and then try to offer practical solutions that reflect this fact. His suggested solution was sandwich booking where you put a lesser known show between two popular shows. Again, this is a really old strategy that doesn’t reflect how people currently make decisions to buy tickets.

I momentarily thought I might be wrong about this being an old strategy when he started lauding the great success the Boston and Philadelphia symphonies had with this strategy–until he got around to mentioning that he was talking about men who were running the organizations in 1939! His criteria for what constituted good popular music with which to sandwich the new stuff was even more telling when he discounted the value of most of Vivaldi in an aside. In my mind, if someone isn’t comfortable or familiar with classical music, that composer’s “Four Seasons” is probably a good introduction.

The only suggestion he made that I felt had merit was that the creators of a work (composers/playwrights), the purchasers and presenters, and the performers of works communicate with each other more effectively about how to combat the apathy about the arts. He didn’t give any examples other than those I mentioned, but as a general concept it seems to have merit.

On the whole though, I was really annoyed by the talk. I am going to suggest some alternative speakers for next year (Douglas McLennan would have been perfect this year given that he is about a 45 minute flight away from Spokane). In my mind, a keynote speaker should set the stage for discussion throughout the conference–even if it is arguments. The only discussion that came out of this session was akin to churchgoers musing about why sinners didn’t see the light and come to church and congratulating one another for taking their children to Sunday school. As much as I may dislike most organized religions, to properly employ this metaphor I have to say–there wasn’t any discussion about effectively witnessing and converting the great unwashed. (The problem being that the speaker essentially derided the great unwashed for their entertainment habits.)