Nonresident Entertainers Tax

Scope

This policy outlines the State of Missouri’s 2% tax on entertainers who are not Missouri residents and the process for the University to withhold compensation as a prepayment of the tax.

Reason for Policy

The purpose of this policy is to ensure the University’s compliance with Missouri state tax laws pursuant to RSMo 143.183.2.

Policy Statement

When a Nonresident Entertainer is paid more than $300 by the University for a performance, 2% of their compensation must be withheld from the gross payment amount.  A MO-2ENT form is completed each quarter that a payment is made to a Nonresident Entertainer and sent to the Missouri Department of Revenue.

State law dictates what is defined as an entertainer for the purposes of this tax.  Generally, ticket sales are an indication that the programming was primarily entertainment and not primarily educational.  When the program is primarily entertainment, the 2% tax is withheld from the entertainer/agent payment.  If a performer provides both non-entertainment and entertainment, the contract with the entertainer/agent should split the compensation on a reasonable basis and submit the tax for the entertainment portion, if it exceeds $300.

Entertainer Refuses the Withholding
It is possible that an entertainer/agent will refuse the 2% tax withholding. If this occurs, the entertainer/agent must be informed of the requirements for Transient Employers and provided with the guidelines for Transient Employers. Under these guidelines, the entertainer will need to register as a Transient Employer, file a bond, and withhold 6% from each member’s wages.  If the entertainer still refuses the tax withholding, the campus will need to fill out a MO-2ENT form and indicate the entertainer “Refused Withholding.

Nonresident Entertainer Claims Exemption
A corporation that is classified as a 501(c) corporation doesn’t make the entertainers exempt from the tax according to Missouri state statutes. To be exempt, the performer (each individual performer if part of a group) must not make more than $600 in a calendar year in the State of Missouri.  If the entertainer(s) claim to be exempt from the tax, the University still must fill out a MO-2ENT form for the payment issued. The gross income paid will be reported and the tax amount will be zero ($0.00).  In addition to the MO-2ENT form, proof of the company’s tax exempt status should be obtained each time they perform, as well as a statement on company letterhead indicating that each of their entertainers do not make more than $600 from performances in the State of Missouri each calendar year.  These two pieces of information will be sent to the State of Missouri for review.  The University is not responsible for verification of the exempt status documentation.

The MO-2ENT form and memo should be prepared by the campus department that makes the payment to the entertainer.  All departments should retain a copy of the MO-2ENT Tax form and the MO-2ENT memo for their own records. The amounts coded as MO-2ENT for the quarter will be logged in the Central Payroll Office and reconciled to accounts payable.  Once all amounts are verified, Central Payroll remits the payment to the State of Missouri.

Note: Foreign entertainers that are exempt from federal income taxes are also exempt from the 2% withholding with the State of Missouri.

Definitions

Agent – a business representative of an Entertainer.

Entertainer – an individual(s) who are compensated by performing any vocal, instrumental, musical, comedy, dramatic, dance or other performance before a live audience. This includes persons traveling with and performing services on behalf of a Nonresident Entertainer who receive compensation, such as a setup crew.

Nonresident Entertainer Tax – the State of Missouri requires “any person, venue, or entity that pays compensation in excess of $300 to a Nonresident Entertainer to deduct and withhold from that compensation an amount equal to 2 percent of the total compensation as a prepayment of tax.” In these circumstances, the University is considered an “employer” and is subject to all penalties, interest, and additions to tax for failure to comply. The tax applies only to entertainers that are licensed by states other than Missouri.  These procedures do not apply if the entertainer/agent is a Missouri business. The factor used in determining whether the individual is a Missouri business is the remittance address of the payee.

Nonresident Entertainer – individuals, partnerships and corporations not residing in Missouri who entertain other people for compensation by performing any vocal, instrumental, musical, comedy, dramatic, dance or other performance before a live audience. This includes persons traveling with and performing services on behalf of a Nonresident Entertainer who receive compensation, such as a setup crew.

Transient Employer – per RSMo 285.230.1, an employer as defined in RSMo Sections 143.191, 287.230, and 288.032, who:

1. makes payment of wages taxable under the Missouri Income Tax Law, the Workers’ Compensation Law, and the Missouri Employment Security Law;
2. is not domiciled in Missouri
3. temporarily transacts any business within the state. If the transaction of business is not reasonably expected to continue for 24 consecutive months, the employer must register as a Transient Employer.

These guidelines can be obtained from the State of Missouri at the site: revisor.mo.gov/main/OneSection.aspx?section=285.230&bid=14979&hl=. 

Accountabilities

Central Payroll Office:

• Log all MO-2ENT forms received from the campuses
• At the end of each quarter, reconcile forms to report from PeopleSoft system
• Make payment and send supporting documentation to the State of Missouri

Campus Departments:

• Initiate a payment request to pay the entertainer
• Complete MO-2ENT forms and memos
• Send memos to the Central Payroll Office
• Ensure compliance with the law at the time of booking an event and payment for services

Additional Details

Forms

MO-2ENT Form: available from the Missouri Department of Revenue at http://dor.mo.gov/forms/.  The form is available in a printable or fillable form.

MO-2ENT Memo: www.umsystem.edu/ums/fa/controller/accountingservices-forms.

Related Information

Missouri Department of Revenue – Nonresidents:
dor.mo.gov/faq/business/nonresident.php

History

Formerly Accounting Policy Manual 10.10.25 – Missouri 2% Payments for Entertainers (revised 4/25/2006)

Procedure

University of Missouri FAQ:
https://uminfopoint.umsystem.edu/sites/controller/public/Accounting%20Services/tax%20issues/MO-2ENT%20Instructions.pdf