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.

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 (North Dakota and Michigan).

Exceptions to Withholding Requirements

-The payment made to a nonresident entertainer or entertainment entity is less than $600.00.

-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 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 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 - Web Based Accounting Module Information

When making a payment using object code 1910, Public Speakers & Entertainers or object code 1970 , Expense Reimbursement for Public Speakers (& Entertainers), a pop up window appears asking if the payment is subject to the 2% Minnesota Nonresident Entertainer tax withholding. If the Speaker/Entertainer being paid is not subject to withholding based on the rules provided in this procedure, you may override the withholding by choosing CANCEL. If the Speaker/Entertainer being paid is subject to the 2% withholding tax, choose to accept the tax withholding. By choosing to accept the withholding, the tax amount will automatically be withheld from the vendor payment and remitted to the correct tax authority (MN Revenue when paying with State Treasury Funds and MnSCU Tax Services when using local funds). If you are uncertain if the payment should be subjected to taxation , exit the screen and contact Tax Services. For information on reversing tax withheld in error from either a local or state fund payment, please visit the ITS Documentation on Payment Voucher Transaction Rules.

Reporting Payments to Tax Services

Report local fund payments subjected to MN Entertainer tax withholding to Office of the Chancellor Tax Services 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. Attach the spreadsheet to an e-mail and send to Ann Page. Keep a copy for your files.

Each month, the Office of the Chancellor will consolidate the spreadsheet data into the required reporting form and submit the information to Minnesota Revenue along with payment.

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.