U.S. presenters, by law, are required to withhold 30% of the gross income being paid an artist at the source unless there is an exemption or reduction from withholding. This is the IRS' way of being sure it collects any taxes that may be owed by foreign artists. There are four (4) options available to reduce or eliminate the withholding tax at the source.

The U.S has tax treaties with approximately 66 foreign countries. These can be downloaded from the IRS website. If the country in which you reside has a tax treaty with the U.S., do not assume you are exempt from withholding, or taxation. There are only a very few treaties that exempt a foreign artist from withholding regardless of the amount the artist earns in the U.S.. And, even with these treaties, there may be other requirements, such as the artist not having a "fixed base" in the U.S., or being in the U.S. for a limited amount of time during the calendar year.

Option 3 is currently limited to artists from the following countries: Armenia, Azerbaijan, Belarus, Georgia, Hungary, Kazakhstan, Kyrgyzstan, Moldova, Poland, Russia, Tajikistan, Turkmenistan, and Uzbekistan. If an individual(s) is from any of these countries they are exempt from all withholding and taxation. However, the individual(s) must have a valid taxpayer identification number to claim a treaty exemption. If they cannot obtain a valid number, they must accept Option 2. If the individual(s) does have a U.S. taxpayer identification number the individual(s) submits IRS Form 8233 (enter 8233 in the Find box) to the U.S. presenter(s) (or whoever the U.S. payer is). Each U.S. payer must complete Part IV of the form and send to the IRS within 5 days of receipt. The exemption from withholding is effective beginning 10 days after the form is mailed to the IRS. Therefore, it is important to file these in a timely manner, well before first payment is to be made. Form 8233 is valid for the calendar year in which it is completed.

Many tax treaties place a cap on how much an artist may earn in another country before taxes are due in that country. For instance a Canadian artist can earn up to $15,000.00 in a calendar year in the U.S. before any U.S. taxes are due. One dollar over that amount and the Canadian individual is subject to U.S. tax on the $15,001.00. However, this income cap before taxation does not automatically exempt the individual(s) from withholding and a CWA must be applied for.

One must study each treaty carefully to determine if the foreign artist's income is subject to taxation, and, hence, subject to withholding. When studying a treaty, look for provisions concerning artists / entertainers specifically or, if no such provision exists in the treaty, "Independent Personal Services".

Refer to:
Applying for a Taxpayer Identification Number (SSN or ITIN)
Filing of Yearly Tax Return

If an individual is an employee of a company (employer) the employer is required to withhold U.S. employment tax at graduated rates (10%-35%) as determined by specific IRS tables and procedures, rather than the 30% withholding.

Determining whether or not an individual is an employee or an independent contractor is a very fact-specific analysis that will vary from situation to situation. The IRS website includes a discussion of the factors to be considered in determining if an individual is an employee or an independent contractor, which may be found here:
Independent Contractor (Self-Employed) or Employee?

As a general rule, individuals performing as "guest artists" are not considered employees, and an organization will not therefore be exempt from the NRA Withholding requirement under this category.

Refer to:
Applying for a Taxpayer Identification Number (SSN or ITIN)
Filing of Yearly Tax Return.

For individual artists and members of an ensemble (even if employees of a "business"), one needs to obtain either a

Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). An individual cannot obtain an ITIN until the individual has applied for and been denied an SSN.

An individual is now required to present him or herself to a Social Security Administration (SSA) office (located in most USA towns and cities) and apply for a Social Security Number (SSN). However, the individual must be in the USA for at least 10 days prior to applying, and must have at least 14 days left on their I-94 Arrival/Departure cards. If the artist will not be in the USA for those 14 days – they should provide a US address where the card, or rejection letter, can be mailed.

To apply for a SSN the individual(s) must complete Form SS-5 and apply in person at a Social Security Administration office (SSA) office in the U.S. Anyone with an "O" or "P" work visa is eligible for a SSN. 

Only if the individual in denied a SSN can they then apply to the IRS for an Individual Tax ID Number (ITIN). This is done by filing a W-7 application for an ITIN number when filing tax return for the year. The rejection letter from the SSA must accompany the W-7 application – the IRS will not issue an ITIN without the SSA rejection letter. In addition, the W-7 must include:

• a copy of the passport that is certified by the government agency that issued it

or - 2 of the follwing - these documents must also be certified by the government agency that issued them:  

• a current national ID card (that includes the individual's name, address, photograph, date of birth and expiration date
• a foreign voter registration card
• a civil birth certificate

Once obtained, a SSN or ITIN lasts indefinitely.

All individuals earning income in the U.S., regardless of tax treaties, are required to file year end tax returns. Tax returns for non-resident individuals (independent contractors) are due June 15 each year for the preceding year.

The following tax forms are to be used for Options 1-4:

Options 1 & 2
Form 1040NR (enter 1040-NR in Find box) to report U.S. income and either Schedule C (enter Schedule C in Find box) to deduct expenses or Form 8833 (enter 8833 in Find box) to claim a tax treaty exemption, if one exists. If the country the individual is from does not have a tax treaty with the U.S., the individual will file a Schedule C. If the artist is eligible for a tax treaty exemption, the individual will file Form 8833 to claim the exemption on income earned.

Option 3
Form 1040NR and Form 8833 to report U.S. income and claim tax treaty exemption.

Option 4
There must be a tax treaty with the foreign country. If so the employee files Form 1040NR and Form 8833 to claim the tax treaty.

As with individuals, foreign businesses are also subject to the 30% withholding of gross fees. In order to qualify for an exemption to withholding as a business, one must be recognized as such by the IRS. A foreign performing arts group cannot simply set up a foreign or domestic corporation to qualify as a business for claiming a tax treaty exemption. The IRS looks at who is the beneficial owner of the income. The IRS looks at whether or not the performers in a group "participate in the profits" of the U.S. performances. For example, a Canadian musical ensemble is incorporated in Canada. The Canadian corporation pays all the tour expenses, and after all the expenses, the performers split whatever profit/loss is left over. In this case, the performers are "participating in the profits". If, on the other hand, the performers are paid a set fee or salary and the fee or salary are not affected by the profit/loss of the U.S. performances, the performers are not "participating in the profits", and the musical ensemble is treated as a "business" for U.S. tax purposes.