# The United States for a Foreign Athlete: 30%, CWAs and the Jock Tax

> 30% of gross under §1441, a CWA filed 45 days before the event, jock tax on duty days, Pittsburgh's 3% struck down on 25.09.2025 and the World Cup formula.

Author: Dana Berzeg — Attorney-at-law, Family Office (https://wiki.private.law/en/authors/berzegova)
Last modified: 2026-09-25T23:52:00.000Z
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Cite as: The United States for a Foreign Athlete: 30%, CWAs and the Jock Tax. wiki.private.law. https://wiki.private.law/en/us-athlete-tax. Version c14ec02c80aa96c250042ba8e74321f315754b243b020be5ac7efd00e48ffb6c.
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## The concept: why a non-resident hands over 30% of gross rather than tax on profit

Section 1441(a) of the Internal Revenue Code obliges any person having the "control, receipt, custody, disposal, or payment" of US-source income of a non-resident to withhold 30% of the payment. For an athlete who flies in for a fight, a tournament or a match as an independent contractor, that is 30% of gross — before the coach's fee, the flights, the insurance, the team payroll and the agent's commission. The final tax is computed on an entirely different base: net income effectively connected with a US trade or business, taxed at graduated rates on a Form 1040-NR. The gap between the withholding base and the tax base is the whole cash story here — the real liability turns out to be a fraction of what was withheld, and the balance sits in the US Treasury until a refund arrives on the following year's return.

The second layer is the states and cities, each with its own "jock tax" and its own allocation rules, none of which a federal withholding agreement touches. The third is the treaty thresholds — useless for a headliner, decisive for the team's support staff. What follows is the mechanics of all three layers as they stand in August 2026, including the abolished Pittsburgh fee, Washington State's new statute and the three-way understanding reached by the revenue authorities for the World Cup.

- Withholding rate · 30% of gross, § 1441(a) IRC
- Return · Form 1040-NR required, including years covered by a CWA (Treas. Reg. §1.6012-1(b))
- Reducing withholding · CWA under Treas. Reg. §1.1441-4(b)(3) and Rev. Proc. 89-47, applied for on Form 13930
- CWA deadline · No later than 45 days before the first covered event
- Statutory exception · §§861(a)(3), 864(b)(1): up to 90 days, up to $3,000 and a foreign payer
- Treaty thresholds · $20,000 Germany and the UK, $15,000 Canada, $10,000 Spain; Russia suspended from 16.08.2024
- State layer · Duty-day allocation; up to 13.3% (California), Washington 9.90% from 01.01.2028
- Canada · Regulation 105: 15% of the payment, reduced by a Form R105 waiver

## The withholding agent: why you cannot slot a company between yourself and the promoter

The statute makes the withholding agent whoever actually controls the money, not whoever signed the contract: the promoter, the league, the club, the tournament organiser, sometimes all of them at once. In its [guidance for withholding agents](https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-faqs-about-foreign-artist-and-athlete-withholding) the IRS notes that a single event can carry several persons with potential liability — a co-promoter who pays only US athletes is off the hook, while whoever pays the non-resident is not.

The classic mistake is to interpose a company between yourself and the payer. Treas. Reg. §1.1441-1(b)(2)(ii) requires a withholding agent who knows, or has reason to know, that a US entity is receiving a payment as agent for a foreign individual to treat the payment as made directly to that individual. A Form W-9 from an American LLC or a Form W-8BEN from a foreign corporation will not, on its own, get you past the 30%: if the athlete controls the recipient, the IRS looks through the structure, and §1461 shields the withholding agent from any claim by the athlete for over-withholding — so withholding is always the agent's safer course. Where a personal company does earn its keep, and where it becomes dead weight, is covered in [the holding structure for a public figure](https://wiki.private.law/en/creator-holdco) and [personal service companies against the IR35 rules](https://wiki.private.law/en/creator-psc-ir35).

The statutory exceptions are narrow. Under §§861(a)(3) and 864(b)(1), compensation escapes both tax and withholding only if three conditions hold at once:

- presence in the United States of no more than 90 days in the tax year;
- compensation of no more than $3,000;
- a foreign payer not engaged in a US trade or business.
That occasionally covers a sparring partner; it almost never covers anyone on the main card. A separate exception under §872(b)(3) applies to individuals in F, J, M and Q status paid by a foreign payer.

## The Central Withholding Agreement: a lawful discount on the 30%

A CWA is a tripartite agreement between the non-resident, a designated withholding agent and the IRS under which withholding is computed not on gross receipts but on projected net income at graduated rates. The legal basis is Treas. Reg. §1.1441-4(b)(3) and Revenue Procedure 89-47; the procedure is set out in the [instructions to Form 13930](https://www.irs.gov/pub/irs-pdf/f13930.pdf) and on the [CWA programme page](https://www.irs.gov/individuals/international-taxpayers/overview-of-the-central-withholding-agreement-program). One caveat in the instructions is decisive: under no circumstances will a CWA reduce withholding below the expected tax liability. It is an instrument of accuracy, not a relief.

What the agreement delivers in practice: a single withholding agent is designated, and every other payer for the covered events is released from withholding; the IRS reviews a budget covering income — including merchandising, sponsorship and broadcast receipts — and expenses, including travel, accommodation and team payroll. Under question 8 of the IRS guidance, training expenses for a specific bout incurred outside the United States are allowed in computing the liability for CWA purposes where they relate to the US income; for boxers and MMA fighters that is often the single largest line in the budget.

The limits are hard ones. A CWA is available only to an individual: the IRS will not enter into one with a foreign company. A US tax resident has no access to it either, because §1441 does not apply to residents in the first place (how status is determined, and what it brings with it for worldwide income, is set out in [the overview of US residency](https://wiki.private.law/en/us-tax-residency)). A tour that straddles two calendar years needs a separate CWA for each year; every member of a touring party applies separately, including those with no share of the profit. And, above all, a CWA does not displace the obligation to file a Form 1040-NR for the year (Treas. Reg. §1.6012-1(b)).

> ⚙️ **The CWA procedure at a glance.** The Form 13930 application, with a draft budget, itinerary, contracts and a power of attorney (Form 2848 or 8821), must **reach** the IRS no later than 45 days before the first event to be covered; the day of the event does not count. A late application is not considered at all — the event simply falls under 30% withholding on gross under §1441. Revenue Procedure 89-47 speaks of 90 days for processing, but the binding rule since 1 January 2013 is the 45-day acceptance barrier. The IRS acknowledges receipt within seven days, then vets both the non-resident and the proposed agent for eligibility and requests further documents on its own timetable. The agreement takes effect once all three parties have signed. Filing channels are fax 866-715-1507 or the CWA Program, 25520 Commercentre Dr., Lake Forest, CA 92630-8884; the 9-2022 revision of the form still prints the old Laguna Niguel address, so follow the IRS page. As at August 2026 there is no separate simplified route for small fees on the IRS site: Form 13930-A is unavailable, and the rules set no minimum amount for a CWA.

## Treaties, Form 8233 and the final payment exemption: when a CWA is unnecessary

The entertainers-and-sportspersons article in US treaties turns on an annual gross threshold: until payments cross it, the country of performance does not tax the income at all; once they cross it, the whole amount is taxable, not just the excess. The threshold is measured on gross receipts, including reimbursed expenses. The mechanics of the article itself, and the "rent-a-star" company route around it, are covered in [the overview of Article 17](https://wiki.private.law/en/article-17-sportspersons); the British leg sits in [the note on taxing sportspeople in the UK](https://wiki.private.law/en/uk-sportsperson-tax).

| Residence | US treaty | Article |
| --- | --- | --- |
| Germany | 1989 | Art. 17 |
| United Kingdom | 2001 | Art. 16 |
| Spain | 1990 | Art. 19 |
| Canada | 1980 | Art. XVI |
| Russia | 1992 | Arts. 5–21 suspended |

| Residence | Annual gross threshold | Exemption for publicly funded visits |
| --- | --- | --- |
| Germany | $20,000 | Yes ("substantially supported") |
| United Kingdom | $20,000 | — |
| Spain | $10,000 | Yes ("substantially supported") |
| Canada | $15,000 | — (does not apply to players employed by cross-border league clubs) |
| Russia | — | — |

The texts are checkable: the [convention with Germany](https://www.irs.gov/pub/irs-trty/germany.pdf) sets $20,000 in Article 17 together with an exemption where the visit is substantially supported by public funds; the [convention with the United Kingdom](https://home.treasury.gov/system/files/131/Treaty-UK-7-24-2001.pdf) sets the same $20,000, but in Article 16 and with no public-funding carve-out; the [convention with Spain](https://www.irs.gov/pub/irs-trty/spain.pdf) sets $10,000 in Article 19. The Canadian treaty is separately interesting for paragraph 3 of Article XVI: the threshold does not apply to an athlete's income from employment with a club participating in a league with regular season games in both countries — which puts NHL, MLB and NBA players outside it altogether.

Set against the other stops on a touring calendar, the US default sits at the top of the range: 30% of gross, the same as Italy, against 20% in the United Kingdom, 24% in Spain (19% for EU and EEA residents), 15% in France and 15.825% in Germany including the solidarity surcharge. What sets the United States apart is less the federal rate than the state and city layer that no federal agreement reaches; the side-by-side grid of rates, thresholds and relief mechanics sits in [the athletes hub](https://wiki.private.law/en/athletes-hub).

A treaty position is claimed on Form 8233, handed to the withholding agent before payment; it requires a US taxpayer identifying number. The trap: on the IRS view, individuals in the United States on work visas such as O-1 or P-1 are generally ineligible for an ITIN and must apply for an SSN, with Form W-7 accepted only alongside a Social Security Administration denial letter — the immigration leg is in [the review of athlete visas](https://wiki.private.law/en/athlete-visas). The IRS also warns separately that a CWA does not take treaty positions into account; the two instruments do not stack.

The third and least known mechanism is the [final payment exemption](https://www.irs.gov/individuals/international-taxpayers/final-payment-exemption): the last payment of the tax year for independent personal services can be released from withholding by an IRS letter to the withholding agent, but the exempt amount cannot exceed $5,000 and the exemption may be used once a year. For a one-off appearance paying a few thousand dollars, that is cheaper than a CWA.

> ⚠️ **A Russian resident has no treaty shield.** On 17 June 2024 the US Treasury gave Russia formal notice confirming the suspension of paragraph 4 of Article 1 and of Articles 5–21 and 23 of the 1992 convention; the suspension has effect from 16 August 2024, both for taxes withheld at source and for other taxes. The IRS puts it plainly: [withholding agents may not accept treaty claims](https://www.irs.gov/businesses/international-businesses/russia-tax-treaty-documents) for payments made on or after 16 August 2024. The Russian convention has no separate entertainers-and-sportspersons article; such income travelled under the independent and dependent personal services articles, both inside the suspended range. The pattern extends beyond the Russian case: a suspended treaty does not merely raise the rate, it removes the entire threshold mechanism that ordinary supporting staff rely on — the same result awaits any nationality caught by a future suspension. The practical result for an athlete with Russian tax residency is that 30% of gross is the base case and a CWA the only lawful way to reduce the withholding, with relief on the Russian side to be checked against [the review of suspended treaties](https://wiki.private.law/en/russia-tax-treaties-suspension).

## The jock tax: the state takes its share regardless of federal withholding

States and municipalities compute their own tax on income earned within their borders, and a CWA does not reach them — the agreement governs federal withholding only. There is one real dispute: how to split annual earnings between jurisdictions. The duty-days method apportions compensation in the ratio of duty days in the state to total duty days in the year — practices, camps, travel and medicals, not merely games. The games-played method divides by the number of games; for a player in a club league the difference is a factor of two or more.

In Hillenmeyer v. Cleveland Board of Review, 41 N.E.3d 1164 (Ohio 2015), the Supreme Court of Ohio held Cleveland's games-played method to violate the Due Process Clause of the federal constitution precisely because it captured days on which the athlete was nowhere near the city; duty days became the de facto standard thereafter. A parallel story is one-off levies: Tennessee repealed its $2,500-per-game professional privilege tax in 2014 after the NHL and NBA players' associations challenged it as applying unevenly across sports (per Grant Thornton's analysis in The Tax Adviser). New Hampshire's Interest and Dividends Tax was repealed for tax periods beginning on or after 1 January 2025. Washington's enacted individual income tax is scheduled to apply from 1 January 2028. The table below reflects those effective dates alongside the top rates applied to the duty-days fraction.

| Jurisdiction | Top rate | What matters in the computation |
| --- | --- | --- |
| California | 13.3% | 12.3% plus the 1% Mental Health Services Tax on income above $1m |
| New York (state) | 10.9% | for New York City add the city rate of 3.876% |
| New Jersey | 10.75% | top bracket on income above $1m |
| Washington | 9.90% from 01.01.2028 | duty-day allocation in section 404 of ESSB 6346, $1m standard deduction |
| Nine states with no income tax | 0% | Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington (until 2028), Wyoming |

A state rate is never applied to the whole year's remuneration, only to the apportioned share, so for a road calendar covering thirty cities the tax map is built out of dozens of small fractions rather than one headline rate.

### Pittsburgh: the 3% on non-residents struck down by the Pennsylvania Supreme Court

On 25 September 2025 the Supreme Court of Pennsylvania invalidated the Nonresident Sports Facility Usage Fee — 3% of income earned by non-residents of the city at three publicly funded venues (PNC Park, Acrisure Stadium and PPG Paints Arena). The case is National Hockey League Players' Association, Major League Baseball Players Association, National Football League Players Association, Jeffery B. Francoeur, Kyle C. Palmieri, Scott Wilson v. City of Pittsburgh, No. 20 WAP 2024; the opinion was written by Justice Wecht.

The fee had been imposed by § 271.02 of the city code under the Local Tax Enabling Act (53 P.S. § 6924.304), which allows a second-class city to charge up to 3% of income for the use of a publicly funded facility. Residents paid a 1% city earned income tax plus a 2% school district levy, and the city argued the combined burden came to the same 3%.

The court rejected that: taxes imposed by different taxing bodies cannot be aggregated when testing the uniformity of a single municipal tax, and the city offered no concrete justification for treating residents and non-residents differently. The provision breached Article VIII, § 1 of the Pennsylvania Constitution (the Uniformity Clause); the anchoring precedent is Danyluk v. Bethlehem Steel Co., 178 A.2d 609 (Pa. 1962).

> 💡 Refunds are not automatic. The court prescribed no mechanism, so the general regime of the Local Taxpayers Bill of Rights applies: under 53 Pa.C.S. § 8425 a written claim goes to the local taxing authority within three years of the date the return was due or within one year of actual payment, whichever is later. The second point is easy to miss: the LTEA itself provides that if the fee is held invalid, the exemption of fee payers from the previously applicable earned income tax ceases. The non-resident's net gain is therefore not 3% but the difference between 3% and the city's 1%, and a refund claim is best prepared with that offset built in.

### Washington: a millionaires' tax with duty days written into the statute

Washington State enacted ESSB 6346 ("Establishing a tax on millionaires") in its 2026 session as Chapter 238, Laws of 2026; the act took effect on 11 June 2026, save for certain sections. The [text of the act](https://lawfilesext.leg.wa.gov/biennium/2025-26/Pdf/Bills/Session%20Laws/Senate/6346-S.SL.pdf) imposes, from 1 January 2028, a 9.90% tax on the Washington taxable income of individuals; section 314 gives a standard deduction of $1,000,000 per person (a single $1,000,000 for spouses), and section 315 prorates the deduction for non-residents.

Section 404 fixes duty-day allocation for non-resident members of professional athletic teams: the Washington share of compensation equals the ratio of duty days in the state to total duty days in the year, duty days running from the start of the official pre-season training period to the last game the team plays or is scheduled to play in that year. A "member of a professional athletic team" is defined by a threshold: total compensation above $1,000,000 for the year. Section 404(3) separately requires payers to file an annual report with the department by 15 April listing team members, identifying numbers, amounts and each member's duty days — meaning the audit data reaches the tax authority from the club, not the player.

Section 407 addresses college sport: a non-resident student athlete's income from the commercial use of name, image and likeness is sourced to the state where the related public services are performed predominantly in Washington, while institutional payments representing a share of athletic revenue are apportioned on the duty-day methodology; by 1 January 2028, the department must submit proposed legislation to the legislature implementing that methodology. The treatment of [NIL payments](https://wiki.private.law/en/nil) is written directly into the state tax statute rather than inferred from general rules.

## The 2026 World Cup: allocating prize money between three host countries

The tournament ran from 11 June to 19 July 2026: 104 matches, 48 national teams, 78 of those matches played in the United States across eleven cities, including the final — figures taken from CWA programme bulletin 2026-01 of 1 April 2026. The revenue authorities agreed the three-way allocation in June: bulletin 2026-05 of 10 June 2026 announced the IRS–CRA consensus, and bulletin 2026-06 of 11 June recorded Mexico's SAT joining it; the CRA published in parallel.

The method is simple and built on matches rather than days: a participating member association's total income from FIFA is multiplied by the number of matches played in a given country and divided by the team's total matches across the three host countries. The authorities consider the same factor reasonable for payments down the chain — to independent contractors engaged by the association and to players. For non-player employees of an association, a time-based allocation is described as reasonable. It is separately stated that association staff and coaches are not subject to tax in Mexico.

More consequential than the fraction itself is who obtained the tournament exemption. On ACCA's analysis, FIFA itself has been exempt in the United States since 1994; Canada and Mexico granted full exemption to every participating national association on their territory; the United States did not — neither negotiations with the Treasury nor a presidential task force on the tournament produced a concession, and FIFA offered the associations no more than support in applying for section 501(c)(6) status on their own, an application procedure with no guaranteed outcome.

The single easing came after the event: Revenue Procedure 2026-28 of 24 July 2026 relieved tax-exempt national associations of the obligation to file Form 990 where they had no other US income. Players were never in scope of any exemption: on PKF O'Connor Davies' worked example, of a player's tournament bonus of $600,000 roughly 40% ($240,000) qualifies as US-source income — and goes under 30% of gross per §1441, or under a CWA.

> ⚠️ The understanding is neither a ruling nor a safe harbour. The bulletin says so outright: taxpayers are not bound by the method and may adopt another where their facts and circumstances justify it, and using the agreed method carries no assurance against a later examination by any of the three authorities. The only real protection is to apply one and the same method consistently in the country of residence and in all three host countries: a divergence of methods between returns is precisely the mechanism that generates double taxation, which then has to be unwound through the mutual agreement procedure. On documenting obligations after the fact, see [clearing up US tax loose ends](https://wiki.private.law/en/us-tax-enforcement-cleanup).

## Canada: Regulation 105, 15% and the waiver

The Canadian leg of a North American tour is gentler. [Section 105 of the Income Tax Regulations](https://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._945/section-105.html) requires any person paying a non-resident a fee for services rendered in Canada to withhold 15% of the payment — not 30%, and not at graduated rates. It is a payment on account of the final liability rather than a final tax: the non-resident files a Canadian return and computes tax on net income. Withholding can be reduced in advance through a Form R105 waiver, and for artists and athletes the CRA operates a simplified process that dispenses with prior approval.

The treaty leg differs too: beyond the $15,000 threshold in Article XVI, Article XVII of the Canada–US convention caps withholding on remuneration for independent personal services — including entertainers and sportspersons — at 10% of the first $5,000 paid by each payer in the tax year.

> 🍓 The short answer. For a non-resident the US default is 30% of gross under §1441(a), not tax on profit; the lawful discount is a Central Withholding Agreement, under which withholding is computed on projected net income at graduated rates — but the Form 13930 application must reach the IRS no later than 45 days before the first event, failing which the event goes under 30% with no discussion. The treaty thresholds in the entertainers-and-sportspersons article ($20,000 for Germany and the UK, $10,000 for Spain, $15,000 for Canada) save the support staff, not the headliner, and for a Russian resident there has been no treaty protection at all since 16 August 2024. The states sit on top of the federal layer: Pittsburgh's 3% non-resident fee was struck down by the Pennsylvania Supreme Court on 25 September 2025 and is refundable on claim within the limits of 53 Pa.C.S. § 8425, net of the city's 1%, while Washington introduces a 9.90% tax on income above $1,000,000 from 1 January 2028 with duty-day allocation and mandatory club reporting. The Form 1040-NR has to be filed either way — with a CWA and with no tax to pay.

## Q/A

### How much does a CWA actually reduce withholding?

There is no fixed rate: withholding is computed on the tour's projected net income at the graduated rates that would apply on the return. For a tour with a heavy expense base — team, logistics, venue hire, preparation — the effective withholding rate can land several times below 30% of gross. But the Form 13930 instructions state expressly that a CWA will under no circumstances reduce withholding below the expected tax liability: what is saved is the cash-flow gap, not the tax.

### Can a CWA be obtained if the application is filed 30 days before the tournament?

No. Applications arriving less than 45 days before the first covered event are not considered and are returned to the applicant; the rule has been in force since 1 January 2013. The day of the event is excluded from the count. The only way out is to accept 30% withholding on gross and reclaim the excess on the Form 1040-NR for the relevant year. On a long tour it is sensible to apply separately for the later events, meeting the 45-day deadline for each.

### Does a CWA remove the obligation to file a US return?

It does not, and this is the most common error. A non-resident entertainer or athlete must file a Form 1040-NR for any year in which they carried on activity in the United States — whether at a profit or a loss, whether or not the withholding fully covered the tax, and whatever treaty benefits were claimed (Treas. Reg. §1.6012-1(b)). The undertaking to file a return for the covered year is written into the CWA itself. A foreign corporation in comparable circumstances files a Form 1120-F.

### How does one reclaim the Pittsburgh fee?

By written claim to the city's taxing authority within the limits of 53 Pa.C.S. § 8425: three years from the date the return was due, or one year after actual payment, whichever falls later. The judgment provides for no automatic refund run; the procedure is being shaped by practice. Compute the claim net: the LTEA provides that on invalidation the exemption of fee payers from the previously applicable earned income tax ceases, so the city's 1% on the same base may be set off.

### What should be done about deferred payments and royalties received after leaving?

Treat them separately from the appearance fee. The source and timing of bonuses, deferred compensation and licence payments for the use of name and image are determined by their own rules rather than by the date of the match, and the entertainers-and-sportspersons article does not always reach them. Paragraph 2 of the entertainers articles in the German, British, Spanish and Canadian treaties expressly mentions deferred remuneration as a marker that income accruing to a third person is still taxable where the performance took place. Detail in the notes on [deferred compensation and relocation](https://wiki.private.law/en/deferred-comp-relocation) and [image rights](https://wiki.private.law/en/image-rights).

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## Factual claims

- Section 1441(a) of the Internal Revenue Code obliges any person having the "control, receipt, custody, disposal, or payment" of US-source income of a non-resident to withhold 30% of the payment.
- A treaty position is claimed on Form 8233, handed to the withholding agent before payment; it requires a US taxpayer identifying number.
- The fee had been imposed by § 271.02 of the city code under the Local Tax Enabling Act (53 P.S. § 6924.304), which allows a second-class city to charge up to 3% of income for the use of a publicly funded facility.
- Washington State enacted ESSB 6346 ("Establishing a tax on millionaires") in its 2026 session as Chapter 238, Laws of 2026; the act took effect on 11 June 2026, save for certain sections.
- The single easing came after the event: Revenue Procedure 2026-28 of 24 July 2026 relieved tax-exempt national associations of the obligation to file Form 990 where they had no other US income.

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