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Central Withholding Agreements

The mission of the central withholding agreement (CWA) program is to provide assistance to non-resident alien athletes and entertainers (NRAAE) performing independent personal services in the United States so that they understand and meet their U.S. tax obligations. In doing so, the program will ensure that: all NRAAEs are treated fairly and consistently; tax laws are applied correctly; and alternative treatments (non-audit procedures) will be used efficiently.

Generally, if you are a nonresident alien entertainer or athlete performing independent personal services or participating in athletic events in the United States, you are subject to 30 percent withholding of gross income. You may be able to enter into a withholding agreement with the IRS for reduced withholding provided certain requirements are met. Under no circumstances will such a withholding agreement reduce taxes withheld to less than the anticipated amount of income tax liability.

Central Withholding Agreement

A CWA is an agreement entered into by the non-resident alien (NRA) athlete or entertainer, a designated withholding agent and an authorized representative of the Internal Revenue Service. The agreement is for a specific tour or series of events and withholding is based upon the budget provided and net profits estimated. The CWA is not effective unless all parties have signed the agreement. The NRA must be in compliance for all required Federal Income tax returns and payment obligations. In the agreement you agree to timely file Form 1040 NR (or Form 1040NR-EZ) for the year in which the CWA covers independent personal services.  If the tour covers a period that spans additional calendar years, more than one CWA may be required.

How to Apply for a CWA

Effective October 1, 2012, all CWA applications must be mailed to the following address, or faxed to (866) 715-1507.

Central Withholding Agreement Program
Mail Stop: 1441
2001 Butterfield Road
Downers Grove, IL 60515-1050

Effective January 1, 2013, requests for a central withholding agreement must be received by the IRS at least 45 days prior to the first event to be covered by the CWA.  Requests received with less than 45 days prior to the first event to be covered by the CWA will not be processed and such event(s) will be subject to withholding at 30% of the gross income as is required by IRC 1441.

Nonresident alien entertainers or athletes requesting a CWA must have filed and paid or made payment arrangements for all previous U.S. taxes.  They must submit the information contained in Form 13930, Instructions on How to Apply for a Central Withholding Agreement (PDF), which includes the following:

  1. Application Form 13930 or other written documentation to include at least:
    1. Name of the NRA to be covered by the central withholding agreement
    2. SSN or ITIN of NRA, if known
    3. Tour event or event to be covered
  2. Penalty of perjury statement signed by either a valid Form 2848 holder or by the Non Resident Alien (NRA).
  3. Form 2848 or Form 8821 unless the NRA is representing himself (if POA is on file for the dates requested, no new POA is needed but statement should be included in application).
  4. Preliminary Itinerary for the Events to be covered by the CWA.
  5. Preliminary budget for income and expense for the events to be covered by the CWA. The application should include deal memos, contracts or any other income source for which there is a close approximation to the live events.
  6. Additional income and expense items requested by the IRS of the applicant must be submitted within the timeframes specified in the request from the IRS to continue the application process.

The designated withholding agent must agree to withhold income tax from payments made to the nonresident alien, to pay over the withheld tax to the IRS on the dates and in the amounts specified in the agreement, and to have the IRS apply the payments of withheld tax to the withholding agent's Form 1042 account. The designated withholding agent will be required to file Form 1042 and Form 1042–S to each nonresident alien covered by the withholding agreement. The IRS will credit the withheld tax payments, posted to the withholding agent's Form 1042 account to the individual nonresident alien. The designated withholding agent will issue Form 1042–S to each nonresident alien athlete and entertainer affected by the agreement. Each nonresident alien covered by the withholding agreement must agree to file Form 1040NR or, if he or she qualifies, Form 1040NR–EZ. The nonresident alien must attach all Form 1042-S to his/her U.S. federal individual income tax return to get credit for the federal income tax withheld by the designated withholding agent.

Mail the central withholding agreement to the following address, or you may fax it to (866) 715-1507.

Central Withholding Agreement Program
Mail Stop: 1441
2001 Butterfield Road
Downers Grove, IL 60515-1050

Fax: (866) 715-1507

For additional information refer to Revenue Procedure 89-47, C.B. 1989-2, 598.

The Internal Revenue Service (IRS) has received questions about Central Withholding Agreements (CWAs) from taxpayers and stakeholders during phone forums and other outreach events. The answers to these questions provide responses to general inquiries and are not citable as any type of legal authority.  Refer to Questions About Central Withholding Agreements .

For additional information or questions about the CWA program, you may contact us via email at CWA Program . Note: Please do not provide any personal information such as Taxpayer Identification Number, Social Security Number, or address. For security reasons we cannot answer questions about your account over the Internet.

Application for a Social Security Number

Individual nonresident aliens (NRA) may apply for a social security number (SSN) immediately upon entering the USA. There is no requirement to wait 10 days before applying for an SSN. However, the NRA needs to be aware that SSA verifies the SSN applicant's immigration status with the Department of Homeland Security (DHS), Systematic Alien Verification for Entitlements (SAVE) program. It may take approximately 10 days for SAVE to be updated with NRA arrival immigration status information. Therefore, if SAVE does not initially verify the NRA's immigration status, staff makes copies of the DHS evidence and holds the SSN application for 10 calendar days. After 10 calendar days, staff requests a new SAVE verification. Dependent on the workload of the processing office, the SSN application may not be worked immediately on the tenth calendar day. Provided there are no discrepancies and SAVE verifies status, SSA processes the SSN application. The NRA should receive the SSN card within 14 days from the date the SSN application is processed.

The mailing address listed as that of the NRA can be a PO Box or an address of their designated Power of Attorney. The address does not need to be in the same geographic location as where the application was made. (e.g., the NRA applies in Denver and the address on the application is New York City). To prevent disruption in delivery of the SSN card, when mailing to a residence/business belonging to someone other than the SSN applicant, we suggest entering an "in care of" in the mailing address.

In order for the application to be successfully processed and for the NRA to receive a SSN, the NRA must show proof of current valid DHS evidence of work authorization to work in the USA such as the DHS Form I-94 annotated with a class of admission permitting work and the unexpired foreign passport. In addition, when the application is processed by the SSA, there must be a minimum of fourteen days remaining on the work authorization.

References/Related Topics

 

Page Last Reviewed or Updated: 11-Dec-2013