Policy and Procedure: 601-Tax Compliance, Reporting and Withholding on Non-Salary Payments
Wisconsin Entertainer Tax
Wisconsin law (Section 71.80(15), Wis. Stats.) and Wisconsin Act 349 requires nonresident entertainers to file a surety bond or cash deposit with the Wisconsin Department of Revenue (WI DOR) at least seven days prior to a performance in Wisconsin if the Total Contract Price for the performance exceeds $7,000. For purposes of this law, each University of Wisconsin campus is considered an employer. If a surety bond or cash deposit is not filed, the university is required to withhold 6% of the Total Contract Price and submit it to the Wisconsin Department of Revenue using a form WT-11.
Definition of Nonresident Entertainer
A Nonresident Entertainer is defined as:
(a) A person who is not a legal resident of Wisconsin and furnishes amusement, entertainment, or public speaking services, or performs one or more sporting events in Wisconsin for consideration, or
(b) A foreign corporation not regularly engaged in business in Wisconsin which derives income from amusement, entertainment, or sporting events in Wisconsin or from the services of a nonresident person as defined in paragraph (a) above. (A foreign corporation is one organized under the laws of some state or country other than Wisconsin.)
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Examples of Nonresident Entertainers
Examples of nonresident entertainers include:
- The owner (sole proprietor) of a group of individuals who travel from one engagement to the next.
- The individual members of an entertainment group, none of which legally own the group.
- An individual entertainer or public speaker who performs at or competes in one or more entertainment, public speaking, or sporting events in Wisconsin.
- A partnership comprised of corporate and/or individual partners which contracts for one or more appearances of the partners in Wisconsin.
- An agent who provides an entertainer for an entertainment event in Wisconsin and provides arranging or managerial services at the event themselves or through one or more employees in Wisconsin.
- A foreign corporation which contracts for one or more entertainment, public speaking or sporting events in Wisconsin.
- A foreign corporation whose employees appear in one or more entertainment, public speaking or sporting events in Wisconsin.
Appendix 1 includes UW-Madison's interpretation of the above rules, which were published by Wisconsin Department of Revenue.
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Wisconsin now has reciprocity agreements with Illinois, Indiana, Kentucky, Michigan and Minnesota. Minnesota residents should provide a copy of form W-222, and residents of all other reciprocity states should provide a copy of form W-220 to claim exemption from withholding.
If the entertainer provides a copy of form W-222 or W-220, attach it to the requisition or Payment to Individual Report, and withholding will not apply. Forms W-222 and W-220 are available from the Wisconsin Department of Revenue.
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Total Contract Price is the amount of consideration indicated in the contract as the price for the nonresident entertainer's performance, including amounts payable in money or the cash value of any medium other than cash.Total Contract Price does not include travel expenses. Travel expenses are payments to, or on behalf of, an entertainer that are 1) made under an accountable plan and 2) for actual transportation, lodging, and meals that are directly related to the performance. It also includes any specific amounts to be paid to the nonresident entertainer for subcontracted services such as lighting, sound, or any other special services or properties required by the nonresident entertainer. Total Contract Price does not include amounts paid to persons other than the entertainer for ordinary and necessary expenses in production of the event (building rent, staging materials costs, utility connections, etc.) unless a specific dollar amount is included in the contract for such expenses. If there is no contract covering the nonresident entertainer's performance in Wisconsin, the Total Contract Price is the amount of the consideration payable as a condition (or result) of the entertainer's performance in Wisconsin. Remember that all contracts must be signed by the appropriate authorized University official.
In the case of multiple performances during a calendar year at any UW campus, the Total Contract Price is the cumulative amount for the year at each UW campus.
In the case of a nonresident entertainment group of independent members, not owned by any single member of the group or any other person, partnership or corporation, the Total Contract Price must be determined for each separate independent member. This may be accomplished by providing a signed statement from the leader of the group, or the promoter or manager, attesting to the members' distributive shares of the total contract price. False statements made under this provision are subject to income tax penalties for filing false returns, and copies of these statements will be submitted to the Wisconsin Department of Revenue by the Accounting Services Tax Compliance Office.
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Procedures for Filing Surety Bond or Cash Deposit
If a cash deposit is to be made or a surety bond is to be filed, the nonresident entertainer must complete the Wisconsin Department of Revenue Form WT-11, "Nonresident Entertainer's Application and Receipt for Surety Bond, Cash Deposit, or Withholding by Employer." Completed WT-11 forms must be mailed to Wisconsin Department of Revenue, Post Office Box 8906, Madison, WI 53708-8906. Complete written instructions are available in Wisconsin Department of Revenue Publication 508.
Nonresident entertainers who file a bond or deposit will receive from the Wisconsin Department of Revenue Form WT-11, with Part C of the form completed and signed by a Department of Revenue employee or a letter on official Wisconsin Department of Revenue letterhead. One copy of this form should be given by the nonresident entertainer to the university before payment is complete for the performance. A copy of Form WT-11 or letter should also be kept by the entertainer (one copy must be attached to the entertainer's income or franchise tax return). When requesting payment, be sure to attach the "Employer Copy" of the WT-11 to the PIR.
Nonresident entertainers who are exempt from Wisconsin income or franchise tax should request a waiver of the bond and deposit requirement. The request should indicate the reason the entertainer was exempt from Wisconsin income or franchise tax and include supporting documents to prove the exemption. The entertainer should send the request to the Wisconsin Department of Revenue, P. O. Box 8906, Madison WI 53708-8906 or Wisconsin Department of Revenue. The Department of Revenue will review the waiver request and either issue the entertainer a waiver from the surety bond or cash deposit requirement, or notify the person that they do not qualify for a waiver. If a waiver is issued for a non-purchase order related item, it must be attached to the PIR and forwarded to the Accounting Services Tax Compliance Office. For a purchase order transaction, the forms should be attached to the requisition.
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Tax Withholding and Reporting
If the entertainer does not file the required surety bond or cash deposit with the Wisconsin Department of Revenue or a waiver has not been issued, and the Total Contract Price exceeds $7,000, the university is required to withhold an amount from the payment for which a bond or deposit should have been filed. This is generally equal to 6% of the payment.
For example, if the university contracts with a nonresident entertainer for $20,000 and no bond or cash deposit was filed by the entertainer, the university must withhold $1,200 ($20,000 contract price times 6%) from the $20,000 payment to the entertainer. NOTE: If this entertainer filed a bond or deposit, but it was only for $15,000 instead of the $20,000 total contract price, the employer must withhold $300 ($20,000 total contract price less $15,000 = $5,000, times 6%).
Accounting Services will calculate the withholding and the Accounting Services Tax Compliance Office will remit the amount to the Wisconsin Department of Revenue along with Form WT-11. A copy of Form WT-11 showing the amount withheld will be returned to the entertainer.
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Third Party Payment Policy
On occasion, entertainers request that we split payments between the entertainer, the pension fund, the union, the agent, and others. It is University of Wisconsin-Madison policy not to honor these requests because the split causes difficulties in tax withholding and reporting. Of course, if there is more than one entertainer (several members of a band, for example), it is allowable to make separate payments to the individual entertainers because this helps in tax withholding and reporting.
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Procedure: 601-Tax Compliance, Reporting and Withholding on Non-Salary Payments