Friday, December 2, 2011

Washingtonian Magazine Names Brian Goldstein to its 2011 List of Best Entertainment Lawyers

Washingtonian magazine has named Brian Taylor Goldstein to its 2011 list of Washington's Best Entertainment Lawyers. Brian was named as one of the "Stars of the Bar" in the area of Performing Arts and Entertainment and was recognized as among the top 10 "dealmakers" who "represent authors, athletes, and other clients in media and the arts."

The Washingtonian's "Best Lawyers" list, which is now available in the December 2011 issue, highlights "the very best in legal talent" within the Washington, DC metropolitan area.

With offices in Fairfax, Virginia and New York City, Brian is a partner in FTM Arts Law, the entertainment division of the law firm of Fettmann, Tolchin and Majors, P.C., and Managing Director of the arts management and consulting firm of FTM International.

Thursday, August 25, 2011

Beware of Scams Involving Fake IRS Emails, Chinese Website Registrations, and Free Money!

By Robyn Guilliams

FTM Arts Law has learned of several email scams being perpetrated by individuals claiming to be with the Internal Revenue Service (IRS). The most current scam involves foreign companies and IRS Form W-8BEN. According to the IRS website (,,id=211669,00.html):
In this scam, fraudsters modify a genuine IRS form, the W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to request detailed personal and financial information. This could include nationality, passport number, bank account and PIN numbers, spouse's name and mother's maiden name, or other personal or financial information or security measures for financial accounts. The scammers may use the genuine form number and name or may make up a new form number, such as W-4100B2. They either e-mail or fax the form or letter. If only a letter, the letter itself contains the request for the personal and financial information. The letter, which claims to come from the IRS, states that the recipient will face additional taxes unless he or she quickly faxes the required information to the number provided by the scammer.
We know of several foreign performing arts companies who recently requested Employer Identification Numbers from the IRS and subsequently received an email, supposedly from an IRS employee, requesting financial information from the company.

Note that all email addresses for actual IRS employees end in the suffix "" (e.g., If you receive an email from a supposed IRS employee with any other type of email address (such as ""), it is a fake!

Also, the IRS will NEVER initiate contact with anyone by email. If you receive an email purporting to be from the IRS, do not respond to the email!,,id=155682,00.html to find out how to spot these scams, and how to report the emails to the IRS.

In addition, we have also had several clients contact us recently about emails they have received from entities claiming to register/audit domain names in China and certain countries in Asia and Africa. These entities purport to inform you that someone is attempting to register your domain name in another country and, unless your respond immediately, your will lose your domain name in these countries. Typically, they kindly offer to register your domain name on your behalf. Do not respond. There are no such entities. It is a scam to get your information. While it is possible for someone to register the same domain name as yours with a different suffix (ie. v., the registration entities do NOT warn you ahead of time. Moreover, registration conflicts are resolved through Uniform Domain Name Dispute Resolution Policies as well as through other applicable laws and treaties--except in China and certain countries in Asia and Africa where such laws don't apply in the first place!

Lastly, it should go without saying, any emails offering to pay you a "fee" to hold money in your account, claiming you have inherited a large sum from a deceased 4th cousin in Uganda, or seeking to wire your organization an unsolicited donation from an arts-loving patron in Uzbekistan should be deleted and ignored. Angels exist, but they do not email you from third world countries asking for wiring instructions.

As a general rule, never send any personal information in response to an unsolicited email and always verify phone numbers, email addresses, and websites.

Thursday, July 7, 2011

What the $%#@??? The IRS Has Changed the CWA Procedures... Again!!!

By Robyn Guilliams

Yes, just when you thought you had mastered the IRS’s procedures for obtaining a Central Withholding Agreement (“CWA”), the IRS has changed the requirements. Is this just another bureaucratic effort to frustrate the arts community? Not entirely. It just seems that way.

Apparently, the IRS has discovered certain “loopholes” in their prior procedures for obtaining a CWA that permitted artists, agents and managers to submit budgets that artificially lowered the taxable income of a foreign artist or tour. Whether or not you were aware of such loopholes, it is now too late. The IRS is tightening up their CWA requirements in order to close these loopholes. Most of the changes address the degree of detail that you will now need to provide with regard to your budget and expenses. While some of these changes were put in place earlier this year, others were instituted only recently. In neither event were these changes accompanied by any official announcement or warning. However, we have now been able to confirm the following new IRS requirements:

1) The IRS now requires that all individual performers be listed on a CWA request. For instance, if an individual who performs with back-up musicians, dancers, etc. wants to obtain a CWA, all of the back-up performers must now be included on the request. (In the past, an individual artist could apply for a CWA without having to list the accompanying performers being paid by that artist.)

2) Because the IRS is scrutinizing artist budgets much more closely than in the past, the IRS is now requiring as much detail as possible when you submit your budget with your CWA. Otherwise, the IRS will contact you to request more detail after you’ve submitted your budget. (These requests can result in much communication back-and-forth between you and the IRS, causing unnecessary delay in the process!) Examples of such detail include…

> Expenses for non-performing personnel (e.g., tour manager, technical crew, etc.): The IRS is now asking for the names of all non-performing personnel touring with the artist, the amount each non-performing individual is earning on the tour, as well as each non-performing individual’s country of citizenship and residence. If any of the non-performing personnel are non-US residents, 30% withholding will be required on the payments to these individuals UNLESS the individual a) resides in a country with which the U.S. has a tax treaty; and b) submits a valid IRS Form 8233 to the IRS to claim an exemption from withholding. NOTE: For the Form 8233 to be valid, it must include the individual’s U.S. tax identification number. If the individual does not have a U.S. tax ID number (i.e., this is his or her first time working in the U.S.), there can be no exemption from withholding. If you are the withholding agent, the IRS will require you to show proof that taxes were withheld when you submit your final accounting.
***Because IRS Form 8233 works differently for performing artists and non-performing artists, here’s a quick review regarding IRS Form 8233: This form is used to claim an exemption from withholding on compensation earned by a foreign independent contractor. The “exemption” is, in most cases, based on a tax treaty. Most, but not all, treaties treat compensation earned by performing artists differently than that earned by non-performing artists. These treaties put a cap on the amount an individual performing artist may earn tax-free in the U.S. For example, the U.S./U.K. tax treaty permits a performing artist who is a resident of the U.K. to earn up to $20,000 tax free. However, if an artist earns more than $20,000, the entire amount earned is subject to U.S. tax.

 As discussed in detail on the Artists from Abroad website (, the exemption available to performing artists is usually inapplicable at the withholding stage. It would apply only to claim a refund from withholding when the artist files his or her US tax refund. (This is because it’s impossible for the person paying the performing artist to know whether or not the performer will be over or under the cap at the end of the tax year.) By contrast, tax treaties rarely impose the type of cap referenced above on independent contractors who are non-performing artists. If a non-performing artist otherwise qualifies for an exemption, the non-performer’s entire U.S. income is usually exempt from tax in the U.S. For this reason, these individuals may submit Form 8233 at the withholding stage to claim the treaty exemption from tax and avoid any withholding.
>All Sources Of Income: If any of the performance contracts provide for contingent fees, box office splits, or back-end fees (i.e., a bonus or percentage of the gross ticket sales after a certain number of tickets are sold), the IRS will expect these additional fees to be included in your budget. Claiming that “we never make the overages” or "its impossible to predict" usually will not be accepted by the IRS. Also, be sure to include estimated figures for merchandising (e.g., t-shirt sales, CD/DVD sales, etc.) as well as for sponsorship or tour support, if any.

>Hotel Accommodations: You will not only have to show your costs for hotel or other accommodations, but you will have to show how those numbers were calculated. How many rooms? For which nights on the tour? For those of you hoping that, based on past experience, the IRS won’t take the time to go through each contract to count how many nights/rooms of hotel are being provided by the venues – au contraire! This has now become their standard operating procedure.

>Travel expenses: Again – detail, detail, detail. How many flights are included in your budgeted cost? From and to which cities is the tour party flying? If a number is budgeted for a motorcoach, on what legs of the tour will it be used, and how is the cost calculated (i.e., by the mile or by the day)?

>Backline: If there is a significant number in the budget for backline, what does this number cover? Note that while you can deduct rentals, you cannot deduct purchases. Also, note that if the performance contract provides that “house sound and lights will be provided,” the IRS will not let the artist deduct any additional costs for sound and lights provided by the artist. On several occasions I’ve argued with the IRS that house sound and lights are sometimes inadequate for our client’s needs and sometimes we don't know this until we arrive at the venue. The IRS does not accept this argument. Thus, if you know in advance that the artist is not going to use house sound and/or lights, or will be providing additional sound and/or lights at the artist's expense, this needs to be reflected in the engagement contract.

3) If there is a loss on the tour, the IRS now requires a letter to the IRS, signed by the artist, stating who is absorbing the loss. (Is the artist bearing the loss? The artist's record company? Perhaps the loss is being made up on the Canadian portion of the tour?) The artist must provide an explanation.

4) If you are an agent, manager, promoter, producer, or some other third party who is requesting a CWA on behalf of an artist, and you’ve submitted a Form 8821 authorizing you to communicate with the IRS on behalf of the artist, you are no longer permitted to sign the cover letter accompanying the CWA request. The IRS now requires that such letter be signed by each artist requesting a CWA. The reason is that the cover letter must include language certifying “under penalties of perjury” that the information submitted in the request is true and accurate. (see the instructions for requesting a CWA, IRS Form 13930.) The artist must also now sign the CWA itself. 

5) As in the past, an artist must be “in compliance” with the IRS to qualify for a CWA. This means that each individual artist must file a tax return for every year in which he or she worked in the U.S., even if no tax was due. While the IRS used to look back no more than three years or so to determine if an artist was compliant in filing U.S. tax returns, the IRS is now looking back as many as six or seven years to see if past returns have been filed!

6) With regard to per diems, the new IRS procedures allow artists to claim only 50% of their per diem as a deduction – the other 50% is considered income to the artists. Lest you think you can simply double the amount of the per diem for CWA purposes, the amount of per diem is limited by the current government per diem rate, which varies from city to city. The current rates may be found here: For instance, the current meal per diem rate for Manhattan is $71. Therefore, the most that you can deduct as a per diem expense per individual is $35.50. Anything above that amount will be considered income to the person receiving the per diem and cannot be deducted from gross income. 

7) If an artist has performed in the U.S. earlier in the calendar year, the IRS is now requiring that the artist provide each date and venue for the earlier performances, the gross revenues for each date, and any taxes that were withheld. The IRS will add the gross income from the earlier performances to the income on the upcoming U.S. tour – and also take into consideration any withholding from the earlier performances – to calculate the amount of withholding necessary to cover the artist’s taxes.

Here are a few additional reminders and tips:
  • The IRS has designated a new mailing address for CWA requests. It is:
Central Withholding Agreement Program
Internal Revenue Service
3651 S. I H 35, Stop 4302 AUSC
Austin, TX 78741

To avoid delays, do NOT send your CWA request to the old address in Nevada!
  • Be sure to respond to any IRS questions about your CWA request in a timely manner! If the IRS asks for additional information, and they don’t hear back from you within a certain time frame, your CWA request may be denied, and letters will be sent to each venue on your artist’s tour directing the venue to withholding 30% of the gross performance fee.
  • Regardless of your level of frustration, always be nice when dealing with the IRS! They have all of the power, and you have none. Remember that the IRS regards the CWA as a privilege, not a right, and if your request is denied, there is no appeal process. Besides, in my experience, it’s usually much easier to give the IRS what they are asking for rather than arguing with them about why they don’t need it, why the information and paperwork is burdensome, and why foreign artists are no longer willing to tour the U.S. Having said that, I must also note that all of the IRS agents I have dealt with in the CWA division have been friendly and helpful when presented with calm and reasonable questions and comments and you express a willingness to comply. Also, bear in mind that IRS agents can and will be inconsistent in their application of the rules for obtaining a CWA. This is partly because they are themselves trying to figure out the new rules and requirements.
  • Bookmark the following websites for future reference: This website, sponsored by the League of American Orchestras and the Association of Performing Arts Presenters, is regularly updated by FTM Arts Law. The site includes a multitude of information on visa and tax issues for foreign artists, including what artists are eligible for a W-8BEN tax exemption, and how to obtain a CWA. Our website contains additional free information and resources that simplify the legal issues involved in U.S. tours of foreign artists, including a foreign artist taxation memorandum, which summarizes the information contained in the Artists from Abroad website. The Internal Revenue Service's website is a valuable source of information that includes complete tax treaties, and forms and publications that offer guidance as to both withholding and taxation. Publications relevant to taxation of foreign guest artists are Publication 515 ("Withholding of Tax on Nonresident Aliens and Foreign Entities"); Publication 519 ("U.S. Tax Guide for Aliens") and Publication 901 ("U.S. Tax Treaties").

Tuesday, March 1, 2011

IRS Steps Up Enforcement of Foreign Artist Tax Withholding!

FTM Arts Law is receiving an increasing number of reports from artists, managers, agents and presenters that the Internal Revenue Service is contacting presenters and venues where non-resident foreign artists are scheduled to perform and directing them to withhold 30% of the artists’ gross fee.

The IRS is sending out letters called Directed Withholding Letters (“DWLs”) and they have serious implications. Unless a foreign artist qualifies for an exemption from tax withholding, or enters into a Central Withholding Agreement (“CWA”) with the IRS, then 30% of the artist’s gross fee must be withheld. (Note that not all exemptions from taxation entitle an artist to an exemption from withholding!) Those who represent or present foreign artists in the U.S. and who continue to choose not to address tax issues are taking an enormous risk.

Why is this happening? How is this happening?

Until recently, the IRS did not actively pursue non-resident artists for U.S. taxes. This led to lax attention to, and even complete disregard of, applicable tax obligations. However, the IRS is now using the internet to search for, find, and aggressively pursue nonresident artists who will be touring the U.S. The IRS finds the touring non-resident artist on the internet and then sends out DWLs to all presenters and venues on that artist’s U.S. tour. Unfortunately, in many cases, these letters are being sent to presenters and venues much too late for the artist to obtain a Central Withholding Agreement and, therefore, the artist is stuck with the 30% withholding—even where the artist has previously been able to avoid withholding by providing presenters and venues with a W-8BEN!

To make matters worse...
To make matters worse, it appears as if the IRS very recently has revised its rules for obtaining a CWA and now is examining CWA requests much more closely.

Among the new procedures:
  • Budgets are being more closely scrutinized, and artists are required to provide much more detail than in the past. For instance, if an artist's budget shows a cost of $10,000 for airfares, the IRS will require detailed information as to how the $10,000 was computed, i.e., exactly how many airfares are included, what is the origination and destination point of each ticket, etc. If a budget includes a cost of $5,000 for hotel, the IRS will require information on how many rooms this figure covers, and in what cities.
  • Even more importantly, the IRS now requires an artist requesting a CWA to identify, by name and country of residence, each member of the artist’s touring party, including each performer who will be performing with the artist. Each performer touring with the artist must be in compliance with their U.S. tax returns. If any performer is not in compliance with their U.S. tax returns, the IRS will direct that 30% of that person's income must be withheld for U.S. taxes.
Its time to abandon long-cherished myths!
The IRS's history of non-enforcement led many artists, agents, managers and presenters into a false sense of security that there were exemptions, actions, or forms that would automatically exempt an artist from withholding or tax – as well as exempt the presenter from the withholding requirements. While these beliefs may have worked in the days of a less-vigilant IRS, this is no longer the case.
Here are the two most common myths:
  • The most enduring misconception is that the W-8BEN form is an easy cure-all for U.S. tax issues, including tax withholding. FTM Arts Law is being contacted more and more frequently by frustrated managers and agents who are accustomed to avoiding all withholding by issuing a W-8BEN form to each venue or presenter. Many venues and presenters – particularly those receiving DWLs – will no longer accept this form to exempt the artist from tax withholding. In fact, the W-8BEN is applicable only in very limited circumstances. For a W-8BEN to be applicable, the foreign group or company cannot be owned by the artists themselves. This excludes almost all quartets, bands, or any ensemble where the artists in any way split the profits. In most situations, such groups, even if they are legitimately incorporated entities in their home countries, must obtain a CWA, or the presenters will be required to withhold 30%. And a W-8BEN is never applicable for an individual artist, even if he/she has formed his/her own corporation. Which brings us to...
  • The second most popular misconception, which is perpetuated by U.S. accountants unfamiliar with taxation issues for nonresidents, is that a foreign artist may avoid U.S. taxation and withholding altogether by forming a U.S. corporation. As an example, we currently are working to resolve the tax quagmires of several foreign artists who had set up U.S. corporations through which all of their U.S. tour income and expenses would flow. In most cases, this plan will NOT avoid U.S. taxes – it will only cause the artist to incur late filing and payment penalties, interest, and unnecessary accountant fees. Most tax treaties provide that income paid to a foreign performing artist through a corporation (U.S. or otherwise) is attributable to the artist individually, and not to the corporation. Our clients - who believed they were in compliance with U.S. tax law under their accountants' plan - are now paying the consequences. One artist in particular has been advised by the IRS that he must file past individual U.S. tax returns going back seven years before the artist will be eligible for a CWA!
Forewarned is Forearmed!
Don't panic! Be proactive! There are several steps that foreign artists and their managers and agents can take toward compliance with U.S. tax law:

1). Be realistic. If the presenters or venues on a nonresident artist’s tour have received DWLs,and it’s too late to obtain a CWA, accept the fact that the artist will be subject to 30% withholding. When the artist files his U.S. tax return, he may claim deductions and exemptions to offset income, or claim the benefits of a tax treaty, and likely receive a refund of part or all of the withheld tax.

2) Plan ahead. Foreign artists and their agents and managers must address tax planning (along with visas and work authorization!) when planning U.S. tour, not after. Determine at the outset if the artist is eligible for a CWA, and if not, what steps must be taken to make the artist eligible (e.g., filing past U.S. tax returns.) If applicable, factor taxes into the engagement fees and budget. If these issues are not addressed at the planning stage, the IRS's current enforcement efforts can impose an insurmountable barrier to a successful U.S. tour.

3) Educate yourself:
  • There is a wealth of information on This website, sponsored by the League of American Orchestras and the Association of Performing Arts Presenters, is regularly updated by FTM Arts Law. The site includes a multitude of information on visa and tax issues for foreign artists, including what artists are eligible for a W-8BEN tax exemption, and how to obtain a CWA. However, if you find the volume of information on this site a bit overwhelming, you might first…
  • Go to Our website contains additional free information and resources that simplify the legal issues involved in U.S. tours of foreign artists - including a foreign artist taxation memorandum which summarizes the information contained in the Artists from Abroad website. (Its also a good resource to print out and provide to anyone who thinks you're making this stuff up!)
  • Go to The Internal Revenue Service's website, though not known for its depth of wit and good humor, is a valuable source of information that includes complete tax treaties, and forms and publications that offer guidance as to both withholding and taxation. Publications relevant to taxation of foreign guest artists are Publication 515 ("Withholding of Tax on Nonresident Aliens and Foreign Entities"); Publication 519 ("U.S. Tax Guide for Aliens") and Publication 901 ("U.S. Tax Treaties").
4) Don't be afraid to ask for help. There are times when you can self medicate and other times when you really need to see a doctor before you get worse!

Thursday, February 10, 2011

How Musicians Get Paid for Digital Performances of Their Music

By Vanessa Kaster, Esq. LL.M.

Musicians MUST REGISTER with SoundExchange in order to get paid royalties from digital performances. Digital performances include having songs played on Pandora, Sirius Radio and other satellite or internet radio streaming sites. You might think that being registered with ASCAP, BMI or SESAC covers this, but it does not. Separate registration with SoundExchange is required to collect royalties when your music is played on digital internet and satellite music providers.

SoundExchange pays royalties to performers and copyright owners. For example if you hear Aretha Franklin’s famous rendition of ‘Respect’ played over internet radio, the royalty payments are paid to both Aretha as the performer (paid to her by SoundExchange) and to Otis Redding who wrote the song (ASCAP pays Otis Redding’s estate). However, if you hear Otis Redding’s original version over internet radio then his estate is compensated for both the original composition, and also for the sound recording (ie both ASCAP and Sound Exchange pay royalties to Otis.) If you own your own track and play on it, then you get paid twice when your track is played on Pandora, Sirius Radio and other satellite or internet radio streaming sites.

The only catch is that Musicians, performers and copyright owners must be proactive in registering with SoundExchange to collect their royalty payments. Reportedly, SoundExchange has between $40 and $200 million dollars in royalty payments sitting around waiting to be collected by musicians. Collect the royalty payments owed to you by registering with Sound Exchange pronto.

Embedding quality metadata on your tracks and double checking that your digital distributor is doing the same is another important step in being paid all the digital music royalties that you are owed. SoundExchange reports that millions of dollars of unpaid royalty payments are due to inadequate metadata embedded on music files and CDs. Make sure that the metadata embedded on your tracks includes: 1) the artist or group name, 2) the copyright holder (you or label name), 3) the track title, 4) the album titles and 5) ISRC number, if available. Embedding this data on your tracks ensures that you are identified as the person to whom royalty payments are owed. Without embedding quality metadata on your tracks, generic information like ‘Track 1’ by ‘Artist Unknown’ is submitted in royalty payment reports to SoundExchange. When this happens, it’s very unlikely that the royalty payments earned by that play will ever make it to you.

In addition to REGISTERING with SoundExchange, double check that the metadata embedded on your tracks is accurate, clear and detailed. Don’t miss out on getting paid your digital royalties.

p.s. if you haven’t already submitted your music to Pandora or Sirius Radio here is the contact info for that too:

Many thanks to Vanessa Kaster for submitting this article for "Raising the Curtain." Vanessa's blog posts on music copyright issues have been recognized as 'Top Music Blogs' by and also by Artist House Music