IMPORTANT CHANGES REGARDING CWA REQUESTS!

By Robyn Guilliams

The IRS has announced that, effective October 1, 2012 (that’s this Monday, people!), ALL requests for Central Withholding Agreements (CWAs) must be sent to the following address/fax number:

         Central Withholding Agreement Program
            Mail Stop: 1441
            2001 Butterfield Road
            Downers Grove, IL 60515-1050
            
            Fax:  (603) 493-5906

The full announcement can be viewed on the IRS’s website at
http://www.irs.gov/Individuals/International-Taxpayers/Central-Withholding-Agreements

In addition, it’s worth noting that the announcement indicates that, effective on January 1, 2013, CWA requests received less than 45 days prior to the first event to be covered by the CWA will not be processed and such event(s) will be subject to withholding at 30% of the gross income…So – be sure to get your request submitted by the deadline!

The announcement also addresses requirements for nonresidents working in the U.S. to obtain a Social Security Number (SSN).  The IRS technically is correct that it is not “necessary” for a nonresident to wait 10 days after arriving in the U.S. to request a SSN.  However, in my experience, many workers at the Social Security Administration (SSA) apparently never received this memo.  I know of a number of nonresidents who have been turned away from SSA offices because the nonresident didn’t wait 10 days after arriving in the U.S. to request his SSN.  So, rather than make the trip into SSA (and possibly wait in long lines) only to be turned away, I strongly advise nonresidents to wait the 10 days before trekking into SSA!

Finally, the IRS has posted a Q & A from a recent “phone forum” on CWAs, which can be viewed here http://www.irs.gov/Individuals/International-Taxpayers/Questions-and-Answers-from-CWA-Phone-Forum 

This page addresses many misconceptions about payments to – or for the services of – nonresident artists, and is recommended reading for anyone who presents OR represents foreign artists (complete with citations to the relevant IRS Treasury Regulations – woohoo!)

IRS Announces New Interim Requirements for Nonresidents Who Wish to Obtain ITINs!!

By Robyn Guilliams

The IRS announced on Friday that it is changing (or in the IRS’s words, “strengthening”) its procedures for obtaining an Individual Tax Identification Number (“ITIN”).  Unfortunately, these new procedures may make it more difficult for foreign artists filing tax returns from abroad to obtain ITINs and stay in compliance with U.S. tax law.

Individuals who have earned compensation for work performed in the U.S. are required to file U.S. tax returns to report that income, even if no U.S. tax is due.  And to file a tax return, an individual must have a U.S. tax identification number.  There generally are two types of tax identification numbers for individuals filing U.S. returns – Social Security Numbers (SSNs), and ITINs.

As many of you know, SSNs may be obtained by nonresident individuals ONLY by applying in person, at a Social Security Administration office in the United States.  And, many also are painfully aware that there are onerous time restrictions for individuals applying for SSNs – in effect, an individual must wait 10 days after arriving in the U.S. to apply for a number, AND the individual must have 14 days of work authorization remaining on his I-94 card at the time of applying for an SSN to be eligible for the SSN.  So, if an artist is here in the U.S. for less than 24 days, obtaining an SSN is practically impossible.

The alternative for these individuals is to request an ITIN at the time of filing a U.S. tax return.  Along with the one-page W-7 ITIN request form, the IRS requires a nonresident individual to submit proof of his or her identity and “foreign status” to obtain an ITIN.  This proof can take the form of a certified copy of the individual’s passport alone, or copies of two of the following: 1) a current national ID card (that includes the individual’s name, address, photograph, date of birth and expiration date); 2) a foreign voter registration card; and 3) a civil birth certificate.  In the past, the IRS has allowed copies of these documents to be certified by a U.S. notary, by a foreign “apostille” (a foreign notary seal recognized by the Hague Convention), or by the government agency that issued the document.

Effective immediately, however, only copies of documents certified by the agency that issued that document will be accepted with ITIN requests.  The IRS will no longer accept passport or other copies that have been certified by U.S. or foreign notaries.  So, for instance, if an individual wishes to submit a copy of his passport as proof of his identity and foreign status, the individual must obtain a copy of the passport certified by whatever government agency issued that passport.

Note that this new “strengthened” procedure is in place only until the end of this year, when the IRS will issue "NEW" guidelines for obtaining ITINs.

The IRS has posted additional information on its website to address additional questions regarding the new procedure.  This information may be found at: http://www.irs.gov/newsroom/article/0,,id=258474,00.html

What does this mean for foreign artists who will be required to file U.S. tax returns, but do not yet have a U.S. tax identification number?  If at all possible, the artist should try to apply for a SSN while in the U.S.  This can difficult due to tight touring schedules, but doing so may be simpler than obtaining documents certified by the appropriate government agency, depending on the artist’s country of citizenship.  The alternative will be to obtain documents (e.g., passport copies) that are certified by the government agency that issued the documents, at least through the remainder of 2012.  When the new ITIN guidelines are issued for 2013 (most likely late this year), we will certainly let you know what the new, permanent guidelines will be, and how those new guidelines will affect foreign performers!

ARTISTS FROM ABROAD has been Updated, Re-Designed, and Re-Launched!

The  League of American Orchestras and Association of Performing Arts Presenters, in conjunction with FTM Arts Law, are pleased to announce the re-launch of ARTISTS FROM ABROAD
 
Relied upon by thousands as the most complete and up-to-date online resource for engaging foreign guest artists and non-US arts professionals, artistsfromabroad.org provides essential guidance, forms, sample documents, and useful links.

Seriously....this is it! Everything you ever wanted to know about visas and taxes for foreign guest artists all in one spot--now fully updated and re-designed.

Authored by Jonathan Ginsburg and Robyn Guilliams of FTM Arts Law, the newly redesigned and re-launched website makes it even easier to find the information performing arts organizations and artist managers need to successfully navigate the U.S. visa and tax procedures required when engaging international artists for performances in the U.S. The new site includes:
 
* RSS feed that can automatically notify you of site updates
* Improved, intuitive navigation
* Updated content and links throughout!

Bookmark ArtistsFromAbroad.org today!

The Truth About Industry Standards

The following was posted on March 21, 2012 on FTM Arts Law's blog "Law and Disorder: Performing Arts Division" which can be found on MusicalAmerica.com:

The Truth About Industry Standards

By Brian Taylor Goldstein

Dear FTM Arts Law:

I was recently reviewing a contract I received from an agent. When I asked for some changes, she told me that her contract was “industry standard” and that nothing could be changed because that’s the way everyone does it. In the future, I don’t want to waste anyone’s time or appear like I don’t know what I’m doing. Are there industry standards for certain types of contracts? Where can I learn what is and is not legally required?

Do not mistake “industry standard” for “legally required.” Something which is “legally required” is mandated by statutes or regulations—such as visas, taxes, licenses, or permits. The term “industry standard”, on the other hand, usually means: “This is how I’m used to doing it and I’d rather not change.” Too often, its employed as a form of peer pressure to make you feel that you have no right to make counterproposals, counter offers, or suggest a new or different way to structure the deal or transaction. Nothing could be further from the truth! The only industry standards in this industry are that there are NO standards! This is not to suggest that there are not ways to structure some deals and transactions that are more common than others, but even a common practice or custom does not mean that it is unchangeable. More significantly, if you polled a cross section of performing arts professionals about any given topic, you will find a significant divergence of opinion as to what is and what is not “standard”. In other words, just because someone has done something a certain way for 20 years does not mean that’s the way everyone else must do it, much less you. It may be “standard” for that individual or organization, but it doesn’t make it “standard” for anyone else.

In your question, you don’t mention the specific terms that were at issue. Depending on the circumstances, what you were asking for may have been completely reasonable or completely ridiculous. But that really doesn’t matter. Perhaps more than in any other industry, the arts is based on relationships and success depends on the health and strength of those relationships. When entering into any arts-based relationship, you should always feel free to ask questions, propose new ways of doing things, and think creatively. This does not mean you will get what you want. That will depend on negotiations and the negotiating positions of the parties. If you need to licensing rights from another party or want to work with them more than they want to work with you, its to be expected that they may counter any or all of your proposals with “take it or leave it.” However, that’s not because of any predetermined “industry standard”, its just that they may be in a better position than you are to dictate the terms they want. That’s not necessarily unfair, its just reality. In response to an attorney who once presented me with a contract which he insisted was “industry standard”, I told him that, according to his “standard”, the artist gets screwed, so we need to pick a better standard. It never hurts to ask!

________________________________________________________________

To ask your own question, write to lawanddisorder@musicalamerica.org

All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. FTM Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously.

"Playing Both Sides of the Net" by Edna Landau

FTM Arts Law is pleased to present industry icon, Edna Landau, who has agreed to be a guest blogger on our site. As most of you know, Edna served as Managing Director of IMG Artists from its founding in 1984 until her departure from the company in December of 2007, during which time she personally managed the careers of some of the world’s most beloved classical artists. We posed the following question: “When you represent an artist, who is the “client”, the presenter or the artist?” Here is her response:

Playing Both Sides of the Net

By Edna Landau

I have often thought that one of the hardest things about being an artist manager is to juggle loyalty to one’s two clients: the artist on your roster and the presenter who you hope will engage your artist. As long as everyone’s needs are in sync, there is no problem. The San Francisco Symphony wants your artist on particular dates, playing the Beethoven Violin Concerto with guest conductor, Herbert Blomstedt. Perfect! Your artist is available, will be playing that very concerto in the same season prior to this engagement and loves working with Maestro Blomstedt. Would that it were that easy all of the time. Let’s look at a few slightly different sets of circumstances:

1. Your artist is contracted to play with the New York Philharmonic on a Tuesday evening in February and has a first rehearsal with the Los Angeles Philharmonic on Wednesday afternoon at 2:00 pm. There is a flight from New York on Wednesday morning, leaving at 7:00 am and getting in at 10:30 am. The orchestra is insisting that the artist must be in L.A. the night before the first rehearsal, especially because of the possibility of inclement weather. The artist is unwilling to give up either engagement and insists that you convince the orchestra that a 10:30 am arrival in L.A. on the day of the first rehearsal should be fine. They argue that in the worst case scenario, they can perform the concerto on only one rehearsal. In this instance, which client do you favor? The manager needs to view the Los Angeles Philharmonic as a highly valued long-term client, with the awareness that taking a belligerent stance that could potentially affect the artistic quality of the scheduled concerts is not wise. If the worst happens, the relationship between manager and orchestra can be seriously compromised and it may also take a long while before the artist is re-engaged. That said, if artist and conductor have performed the work together before and it is not an unfamiliar work to the orchestra, there might be some room to persuade the orchestra to take a chance, since they will presumably still have the dress rehearsal together. If the orchestra doesn’t agree, especially since it can be extremely complicated to change rehearsal orders at the last minute, it is the manager's job to convince the artist that they will actively pursue the next possible opportunity to bring artist and orchestra together.

2. The Toronto Symphony has engaged an artist for subscription concerts. At the time when the contract was issued, they asked for a clause stating that the artist would attend a post-concert reception. The artist’s manager consulted with the artist who asked that the presenter accept wording indicating he would make best efforts to attend. He did not want to be contractually bound in the event he took ill and felt he couldn’t do anything more than the concert. The concert day arrived. The artist learned that very day that his best friend from conservatory days was driving 200 miles to attend the concert and wanted to have dinner afterwards. He would be leaving at 6:00 am the next morning. The artist asked the manager to check with the presenter if it would suffice for him to meet VIP’s in the green room and be excused from the reception. He clearly recalled never having contractually agreed to any post-concert activity. The presenter informed the manager that their largest donor, who had funded the concert, was hosting the reception and would not take kindly to a fleeting appearance by the artist. Their relationship with that donor could also be in jeopardy. Whose arm should the manager twist? Neither. The artist should be reminded that the presenter might well be in a position to re-engage them far into the future and it would behoove them to put their professional priorities first. At the same time, the manager might inquire as to whether the artist could attend for a brief while (not to exceed 30 minutes) and whether the donor could be sure to be accessible at that time. They could also check whether the artist’s guest could attend. If the answer is full reception or nothing, the artist should accede to the request, as it was known from the beginning. If, on the other hand, the artist asked to be excused due to illness, which is presumably obvious to the presenter and the donor, the artist’s health should be of paramount concern and a backstage meet and greet might suffice.

3. An artist of some renown is being engaged for a recital in a major city where there are two suitable venues. One has a capacity of 800 and the other has a capacity of 1500. The artist already played once before in the smaller hall and wants to now play in the larger one because they view it as being more prestigious. The presenter only sold 500 seats to the artist’s last recital and feels it is too big a stretch to move to the larger hall. The risk of losing considerable money is too great and they think it would be far better for themselves and the artist to be able to advertise a sold out concert. The artist wants the manager to hold firm with regard to the larger venue. What to do? No manager wants to see a presenter lose money and an artist shouldn’t either. If the artist is adamant, one solution might be for the manager to propose a box office split in the larger venue that would ensure that the presenter’s reasonable and well documented expenses are covered, with the artist receiving an agreed upon fee (perhaps what they would have received in the smaller hall). Any remaining box office income could then be split by the two parties as agreed. The manager will want to stay on top of the presenter's venue and marketing costs and the presenter may request that the artist offer a program that is not their most esoteric. Some presenters might prefer not to share their event budget with the manager but rather to pay a guaranteed fee plus bonus payments when certain pre-established levels of ticket sales are reached.

In the thirty plus years I worked in artist management, I never had any doubt that the artist was my primary client (hence the job description ARTIST manager). I never pushed an artist to play particular repertoire because I knew that making a sale depended on it. At the same time, I never underestimated the importance of cultivating presenter relationships and doing everything possible to please them. Underlying every decision was a sense of privilege that so many important artists trusted me with their representation and believed that I would put their needs first and work with them to reach the best solution in all challenging situations. I hope that all artist managers concur with this approach, no matter how difficult the current economic climate may be.

© Edna Landau 2012

www.ednalandau.com

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Edna’s many years of dedication to the arts and the field of arts management have been the subject of a CNN documentary on their series entitled "Movers", broadcast internationally in the year 2000. She was also featured in New York Magazine's May 15, 2006 issue entitled "The Influentials" in which she was described as "the intensely coveted, hugely devoted grande dame of New York managers who inspires a rare level of trust and commitment from her clients." In January of 2008, the International Society of the Performing Arts awarded Ms. Landau their International Citation of Merit, recognizing her Lifetime Achievement in the performing arts. In 2009, she was appointed to the Board of Directors of Chamber Music America.

Edna is currently available to provide private consulting services for artists, ensembles, and organizations. She also writes "Ask Edna", a free weekly career advice blog hosted by www.MusicalAmerica.com. For those looking for wise, sensible, and valuable career and organizational advice in the performing arts industry, look no further. You can visit Edna’s website at www.ednalandau.com.