MN Nonresident Entertainer Tax
Withholding and Reporting Procedures
Objective: To provide procedures on withholding and reporting the 2% Minnesota Nonresident Entertainer Tax on gross compensation paid to nonresident entertainment entities performing in Minnesota.
Scope: This procedure applies only to payments made to nonresident entertainment entities from local accounts. Payments from State Treasury accounts fall under the Department of Finance procedures.
NOTE: Payments made to nonresident entertainers from State Treasury accounts are also subject to withholding but are not reported by Tax Services. For instructions on withholding from nonresident entertainer payments made from State Treasury accounts, please see DOF Operating Policy and Procedure Number 0807-02.
Definitions
Gross Compensation:
- All compensation paid for a performance. A performance is an exhibition or presentation before an audience, such as a play, musical program or speech.
- Reimbursed expenses (transportation, hotels, meals, sound and lights, security, etc.).
- Prize winnings at spectator events.
Entertainment Entities:
- A nonresident entertainer, paid for providing entertainment who is operating as an independent contractor.
- A partnership that is paid for entertainment provided by nonresident entertainers who are partners.
- A Corporation that is paid for entertainment provided by nonresident entertainers who are shareholders of the corporation.
Entertainers: include, but are not limited to, musicians, singers dancers, comedians, actors, athletes, and public speakers.
Nonresident: an individual who is not a resident of Minnesota or a state with which Minnesota has a reciprocal taxing agreement under section 290.081 (Wisconsin, North Dakota & Michigan).
Exceptions to Withholding Requirements
-Nonresident public speakers are subject to the nonresident entertainer tax. However, if a speaker's compensation is less than $2,000 per engagement or is merely a reimbursement of expenses, the institution is not required to withhold. The speaker must still file a nonresident entertainer tax return and pay any tax liability due. Note: This exception applies to public speakers only. All other entertainers are subject to the tax regardless of the amount.
-Individuals who are full-year residents of North Dakota, Wisconsin and Michigan are exempt from the nonresident entertainer tax through reciprocity agreements. However, they must have regular Minnesota income tax withheld from their pay unless they properly complete Form MW-R, Reciprocity Exemption/Affidavit of Residency(.pdf). This withholding requirement applies only to independent contractor entertainers from the 3 reciprocity states. Be very sure to get the completed Form MW-R to avoid this additional administrative and financial burden.
-Partnerships and corporations, if all partners or shareholders are full-year residents of North Dakota, Wisconsin or Michigan, are also exempt from the nonresident entertainer tax if Form MW-R is completed and provided to MnSCU.
-Not-for-profit entities that indicate their tax exempt status on Form W-9 (in the "Other" box description) are also exempt from the 2% tax.
If You Hire Nonresident Entertainers - Form W-9
You must obtain the federal tax identification (ID) number of all entertainment entities. Use federal Form W-9, Request for Taxpayer Identification Number and Certification(.pdf), and verify the form is filled out correctly. Please see Instructions for the Requester of Form W-9.(.pdf)
Do not accept a Post Office Box or an agent's or promoter's address. Entertainment entities must provide their own street address, city and state. Individuals must supply their social security number and businesses must supply their federal taxpayer identification number.
Payment to Entertainment Entity
1. Process a Payment Voucher (AC0220UG for encumbered amounts, AC0219UG for non-encumbered amounts) to the entertainment entity for 98% of the amount owed. Use object codes 1910-Public Speakers and Entertainers and 1970-Expense Reimbursement for Public Speakers and Entertainers, as applicable.
2. Process an Expense Voucher (AC0212UG) to the entertainment entity for 2% of the amount owed using the entertainer's vendor number and object codes 1910 and 1970 as applicable. Process a Cash Receipt (AR0001UG) to your local bank account for this same amount to general ledger account 8661-Entertainer Tax Payable.
3. File copies of all transactions for month end reporting.
Deposit of 2% Withholding - Form ET-D, Promoter's Deposit Form
The total amount of entertainment tax withheld must be submitted to the Office of the Chancellor by the 10th of the month following the month of the local account payment.
1. Fill out the attached Excel spreadsheet(.xls) with all required information.
2. Prepare a G/L Payment Voucher (AC0219UG) to Minnesota State Colleges and Universities, Attn: Tax Specialist, for the Amount Due to Office of the Chancellor as shown on the spreadsheet.
3. Attach the spreadsheet to an e-mail and send to Ann Page. Keep a copy for your files.
4. Submit the check to MnSCU Tax Specialist, 30 7th Street East, Suite 350, St. Paul, MN 55101
Each month, the Office of the Chancellor will consolidate the spreadsheet data into the required form and submit to the Department of Revenue along with a check for the total withholdings from local account payments.
Form 1099 MISC
The total amount paid to entertainment entities and the entertainer tax withheld must be reported to the entertainment entity and to the state on Form 1099 MISC(.pdf). This includes amounts of less than $600 and payments to corporations that normally would not be reported on a 1099.
In the cases where a 1099 is not federally required, the words "For Minnesota Use Only" will be written across the top. The Office of the Chancellor will produce Form 1099 MISC.
Year End Tax Reporting
The Office of the Chancellor will file the special Forms 1099 along with consolidated Form ET-A Nonresident Entertainer Tax, Promoter's Annual Reconciliation(.pdf) by the required due date.
Nonresident Entertainer Tax Return
Institutions should advise the entertainer to review Minnesota Department of Revenue Form ET-R, Nonresident Entertainer Tax Return(.pdf) instructions to determine if the entertainer must file by April 15.
All entertainment entities are allowed a credit up to $120 on the return so the entity may be eligible for a refund of all or a portion of the amount withheld.
Examples:
1. Speaker: A public speaker presents at Metropolitan State University and is paid $3,000 directly for his appearance. The speaker is a resident of Iowa and is paid as a self-employed contractor. He is considered an entertainment entity and Metropolitan State University must deduct and deposit the $60 nonresident entertainment tax. Note: If the contract specified that the speaker were to receive $2,500 for public speaking and $500 for non-public speaking, then the university should withhold $50 (2,500 x .02) in nonresident entertainer tax.
2. Athlete: A member of a professional sports team, who is a resident of New York, plays a game in Minnesota. The compensation he receives for his Minnesota performance is paid by the owner of the team. The player is considered an employee of the team and not an entertainment entity. The entertainer tax does not apply. Note: The owner of the team should withhold Minnesota income tax from the athlete's pay for his performance in Minnesota
3. Comedian: St Cloud State University hires a comedian to perform her comedy routine. The comedian is a sole proprietor and is a resident of Florida. St Cloud State pays the comedian $4,000 plus reimburses him $1,000 for travel expenses. St Cloud State must withhold $100 (5,000 x .02) in nonresident entertainer tax.
4. Band: Minnesota State University-Moorhead hires a band from Nashville to perform two shows. The band is a partnership. All band members are partners and are residents of Tennessee. The partnership is an entertainment entity and amount paid to the band for their performance is subject to the nonresident entertainer tax.
If you have questions or comments please e-mail us (tax@so.mnscu.edu) or refer to the staff directory link at the top of this page for additional contact information.
