Policy on Payments to Athletes and Entertainers
The State of Connecticut has enacted legislation that requires all employers to withhold Connecticut State tax on nonresident "performers" on the income derived from Connecticut sources. Performers include actors, singers, musicians, dancers, writers, directors and set designers and supporting acts crews (i.e. lighting). Other payments subject to this withholding include payments to public speakers, athletes, trainers and referees. Independent Contractors, such as nonresident owners of bands, orchestras, plays, dance teams and other similar performing entities are also subject to these withholding rules.
Withholding is also required on payments to agents and third parties on behalf of the nonresident performer or performing entity.
Nonresident alien visitors or employees are not exempt from Connecticut State tax or tax withholding under any circumstances, since Connecticut does not recognize federal tax treaties with foreign countries.
Note-Federal Form 1099-Misc is required by the State of
Connecticut for withholding on Corporations for CT A&E tax.
Exceptions to withholding:
An individual who is treated, for tax purposes, as an employee by the University.
The performing entity registers to withhold income tax as a Connecticut employer.
The performer/performing entity is a corporation, LLC, or partnership that has an office in Connecticut.
The amount of any individual payment derived from Connecticut sources is less than $1,000.
The amount of all payments within a calendar year is expected not to exceed $3,000. A Form CT-590-Request for waiver of withholding must be completed and sent to the Connecticut DRS (Department of Revenue Services).
Receives reduced withholding or a waiver (Form CT-595) from the Connecticut Department of Revenue Service.
The services are not performed in Connecticut.
Speakers and lecturers receive an automatic exemption for any performance fee under $5,000.
Effective Tax Withholding Rate: The mandatory tax
withholding rate is 6.7%.
Under certain circumstances, the State of Connecticut may issue a waiver or reduce the withholding rate. To apply for a reduced rate of waiver the performing entity must file a reduced withholding request (Form CT-588) with the Department of Revenue Services. The State requires up to 14 days to process these requests and Wesleyan is required to withhold at the 6.7% until the waiver has been approved.
Procedure for withholding and reporting:
The Department/Office contracting for the Performer’s Services must complete an accounts payable voucher with the vendor marked as "AE", submitted to the Office of Finance with the request for payment.
The University will issue a form 1099-Misc. income statement at the end of the calendar year.
The individual from whose payment Connecticut income tax was withheld must submit a copy of Form CT-592 with his or her Connecticut income tax return.
Failure to comply with this policy will result in the originating department being charged for the applicable tax withholding on the contracted fee and any interest, penalties and tax gross up that may accrue.
Revised April 2010