A Central Withholding Agreement is a contract between three parties: a non-resident athlete or entertainer; a paying/withholding agent representing the athlete or entertainer; and the Internal Revenue Service. This contract presents the IRS with a budget for a tour or event, including an estimate of expenses that will be paid by the entertainer or athlete. The IRS reviews the contract and informs the withholding agent of the amount to be withheld based on NET earnings projected rather than GROSS earnings, using the same graduated rates afforded to U.S. citizens and residents.

Anyone who is not a U.S. citizen or U.S. resident with ‘green card’ status is considered a nonresident alien.

A withholding agent is any person who has receipt, control, custody and disposal of a nonresident alien’s income that is subject to withholding under U.S. tax law. A withholding agent accepts personal liability for the tax required to be withheld.

Although there may be many withholding agents for the same transaction, the IRS requires withholding only be done one time. Therefore, having a designated U.S. withholding agent eliminates the potential for duplicate withholding.

IMPORTANT: The IRS will ONLY negotiate Central Withholding Agreements with withholding agents who are authorized and qualified to do so.

• A Contract specifying the compensation the nonresident alien will earn in the U.S.
• A preliminary budget displaying U.S. expenses the nonresident alien expects to pay in relation to that projected income
• The Names and addresses of all nonresident aliens covered by the agreement
• An Itinerary of all dates, locations and events covered by the agreement
• Copies of all contracts that the covered nonresident aliens or their agents and representatives have entered into regarding the time period and performances or events to be covered by the agreement
• Contact in case the IRS needs additional information to process the agreement (including a fully executed Form 8821 or Form 2848)
• The Name, address and employer identification number of the proposed withholding agent for the agreement

The earlier we are involved the better we can represent your interests. However, we understand the fast-paced nature of the sports and entertainment industries, and we will do everything we can to help you take advantage of emerging opportunities. As a general guideline, anyone requesting a CWA should apply for the agreement with the IRS at least 45 days prior to the first show of your itinerary. We need to talk with you two weeks prior to this.

Expenses that the artist will be paying in regards to the tour (tour bus rental, flights, travel insurance, etc.) are expendable through a CWA. There are special situations where expenses are not allowed but these are typically a case by case basis.

No, state taxes are not deductible. The NRA will be required to file an individual state tax return in order to get a return.