Central Withholding Agreement (CWA) Services
Withholding on Foreign Performers and Athletes for U.S. Promoters, Venues and Touring Companies — From the First Contract to the Final Return
For a nonresident performer or athlete paid as an independent contractor, a U.S. payer generally withholds 30% of the gross fee. A Central Withholding Agreement lets withholding follow projected net income instead — and the IRS must receive the request at least 45 days before the first event.
SW Accounting & Consulting Corp is based in Los Angeles and works with clients across the United States, with California as our home state. Every engagement is led personally by CEO Sangwon Youn (US CPA, California; KICPA) from the first consultation through delivery, with a team of associate CPAs supporting the day-to-day work. We work in English and Korean.
Who do you work with?
Both sides of the payment: the U.S. payers who must withhold, and the foreign performers, athletes and touring companies whose fees are withheld.
Promoters, venues, festivals, booking and production agencies, sports event organizers and corporate event hosts on one side; artists, athletes, their managers and touring companies — including Korean agencies and production companies — on the other.
What does SW handle?
Planning before contracts are signed, the CWA request and its IRS follow-up, the withholding agent’s filings, and the post-tour returns.
Before signature, we map who pays whom, whether fees are gross or net, when deposits move, which events fall in California, and how the 45-day deadline fits the tour calendar — while withholding and gross-up terms can still be negotiated.
For the CWA, we build the U.S. budget, prepare Form 13930 and submit it under a Form 2848 power of attorney signed by each performer, answer the IRS’s follow-up questions, and prepare the final accounting after the tour. CWA requests are work our CEO has handled many times.
For the withholding agent, we prepare Forms 1042 and 1042-S and, in California, Forms 592, 592-V and 592-B and the payees’ Form 589 requests. After the tour, we prepare the performers’ Forms 1040-NR and California nonresident returns, and Form 1120-F where a foreign company needs one.
What should we send to get started?
The contracts, the itinerary and the list of people on the tour — early, because the IRS must receive the CWA request at least 45 days before the first event.
That means the performance contracts and deal memos; every U.S. date, including those still in negotiation; each performer’s name, country of residence and U.S. taxpayer identification number if any; the payer who will act as withholding agent; sponsorship or tour-support agreements; and a draft U.S. budget. Past U.S. filings must be current before the IRS grants a CWA, so tell us if anyone has worked here before.
We are paying a foreign performer. Who has to withhold, and how much?
Whoever controls the payment is the withholding agent, and for a performer paid as an independent contractor the default is 30% of the gross fee — before travel, crew or production costs.
Under IRC §1441, a person with control over U.S.-source income of a nonresident alien must withhold 30% of it, and §1442 applies the same rate to foreign corporations. Under IRC §1461, the withholding agent is liable for tax it was required to withhold. Performers paid as employees are subject to graduated wage withholding instead, and a valid treaty exemption claimed on Form 8233 can apply where a treaty allows it (Publication 515).
Paying through an agent, a manager or the performers’ own company does not change the result: under the IRS’s artist and athlete withholding FAQs, a payment to a company acting as the performer’s agent counts as paid to the performer. The withholding agent deposits the tax through EFTPS and files Form 1042, with a Form 1042-S to each payee, by March 15 of the following year.
What is a CWA, and how early do we have to apply?
A CWA is a three-party agreement among the performer, a designated withholding agent and the IRS that bases withholding on projected net income; the IRS must receive a complete request at least 45 days before the first event it covers.
On Form 13930, the IRS estimates each performer’s U.S. taxable income from the tour budget and applies the graduated rates, though never below the anticipated tax. The designated withholding agent — an independent third party unrelated to the performers — deposits the agreed amounts and files a final accounting; other payers on covered events are relieved of withholding.
A CWA is only for individuals: a group’s request lists every covered member, backing musicians included. It covers only payments made after all parties have signed; a deposit paid before then is not covered, and withholding on it is decided separately. A tour spanning two calendar years needs a CWA for each year. Late requests are not processed and the IRS may ask follow-up questions, so treat 45 days as a cutoff, not a target.
Do we also have to withhold for California?
Yes — 7% of payments for performances in California once a nonresident payee’s total for the calendar year exceeds $1,500, and neither a federal CWA nor a tax treaty reduces it.
Regulation 18662-6 applies California’s withholding on nonresidents to entertainers and athletes — actors, bands, orchestras, stage crews and more — whether the payment goes to the performer, an agent or a non-California company. The FTB expects withholding on the entire contract amount, deposits included, and does not follow U.S. tax treaties.
The state’s counterpart to a CWA is Form 589, Nonresident Reduced Withholding Request. The payee files it with its projected California income and direct expenses, and the FTB must approve the reduced amount before the payment is made; the regulation asks for the request at least 10 business days before the performance date if filed online, or 21 if filed on paper. Expenses on Form 589 cannot exceed 50% of the gross California payment, so the reduced withholding cannot go below half of the standard amount.
The withholding agent remits with Form 592-V, files Form 592 for each of the FTB’s four payment periods, and gives each payee a Form 592-B by the following January 31. Our guide to foreign artist withholding for California venues and promoters covers the payer’s side.
What happens after the tour?
Each performer files a U.S. nonresident return that settles the actual tax against what was withheld, with or without a CWA, and a foreign company files its own return when required.
A nonresident performer who worked in the United States must file Form 1040-NR for that year, even if withholding covered the tax or a treaty applies; it is also how excess withholding is refunded. A foreign corporation files Form 1120-F if it was engaged in a U.S. trade or business or claims treaty benefits or a refund. In California, nonresident aliens file Form 540NR and claim the Form 592-B credit.
We are a Korean agency or production company. What should we plan for?
Plan the tax side with the visas and venue contracts: the U.S.–Korea treaty gives performers almost no relief, so the CWA, filed for each performer, is usually the main tool.
The 1976 U.S.–Korea income tax treaty has no article for entertainers and athletes. Its personal services articles (Articles 18 and 19; see Publication 901) exempt U.S. income only up to $3,000 a year and under 183 days of presence — limits a tour passes almost at once. A CWA does not build in treaty positions, and California does not follow the treaty.
The Korean company is a separate question. Article 8 exempts its business profits unless it has a permanent establishment here, but the IRS looks through a company that simply collects its performers’ fees, and a foreign company claiming treaty benefits or a refund files Form 1120-F. Contract structure decides which applies, so we review it before signing and, as a Korean-speaking CPA firm, explain it to the team in Seoul in Korean. A U.S. entity of your own does not take the performers outside these rules.