WHAT IS THE Non-Resident Entertainers' Tax
Non-resident entertainers’ tax is a state tax levied against performers whose legal residence is outside of the state where the performance is given.
BREAKING DOWN Non-Resident Entertainers' Tax
Non-resident entertainers’ tax is a type of state tax that requires a certain percentage of any gross earnings from a performance be withheld for the state the performance occurred in. A non-resident entertainer is typically defined as an individual, partnership or corporation that entertains people for compensation by performing before a live audience in an area outside their legal residence.
The rate for the non-resident entertainers' tax is different for each state that uses the tax. For example, both Missouri and Minnesota enforce the tax as 2 percent of gross earnings for a performance. California, on the other hand, requires 7 percent of all payments that exceed $1,500 in a calendar year. Each participating state also has special requirements, such as the minimum contract amount above which the tax will apply. Minnesota, for example requires whoever is responsible for paying the entertainer to calculate the tax, deduct it from the performer’s payment and remit the tax to the Minnesota Department of Revenue.
Example and Penalties
Actors, musicians, dancers and other musical acts are obvious examples of performers who may be subject to a non-resident entertainers’ tax. However, this tax could also apply to other types of individuals who entertain in less obvious ways. A marathon runner from another country, for example, who competes at a marathon race in Minnesota and wins a prize of $5,000 would be subject to Minnesota’s non-resident entertainer tax. In this case, the promoter of the marathon must withhold and remit the nonresident entertainer tax to the Minnesota Department of Revenue.
In Missouri a non-resident entertainer is defined as an individual or corporation not permanently residing in Missouri who entertains for compensation by performing vocal, instrumental, musical, comedy, dance or other performances before a live audience. This includes traveling performers as well as setup crews.
While the rates and methods of withholding and submission for the non-resident entertainers' tax differs across states, most states apply penalties for performers and venues who do not adhere to the tax. In Missouri, for example, if the venue does not withhold the appropriate amount from the performer’s pay, the venue may be issued a non-filer assessment. The entertainer will also be subject to the transient employer law and must then register, post a bond and file the withholding tax returns with the Missouri Department of Revenue.