Join the Fight: Tell Congress That Being an Artist/Author IS a Business!

Like most people, I barely understand most of the legalese involved in tax law.  In fact, until recently, I blindly believed that, as an Author, since I considered myself engaged in business, and everything I read told me I had to file a Schedule C as a sole proprietorship, when I had royalty income, I was engaged in a For-Profit business.  Well, imagine my surprise when the State of Arizona tried to tell me, just before Christmas, last year (Thanks alot Arizona Scrooge!), that because I couldn’t prove a profit (ie, more income than expenses) in three out of five years as an author, I was not, in fact, engaged in a For-Profit Business.

Apparently, being an Artist/Author is one of those areas for which you are supposed to be punished, in the good ol’ US of A (or, at least, in Arizona), thanks to one of a set of “tests” to determine whether or not a business meets the criteria for “For Profit.”  Unfortunately, one of those tests requires a showing of profit — something few authors or artists are familiar with, when it comes to their art.  And, equally apparent is the ridiculous notion that an author or artist should ONLY be engaged in writing/art in order to be classed as pursuing that For-Profit status without proof of said profit margin.  Apparently, we really ARE supposed to starve and end up in the poor-house/bankrupt in order to be taken seriously by the tax laws.

Well, if you’re an author/artist, or family or friends of such, you know how driven a profession this is.  We dedicate every spare moment we can squeeze out of our day for the creation of our creative minds.  And there’s not a one of us who doesn’t intend to someday be able to do nothing but write, paint, etc, etc  full-time.  But we’re also realistic enough to realize that with millions of books printed every day, and hundreds of thousands of artists out there, most of us aren’t likely to ever see our names on or far enough up the bestsellers list or on gallery listing, etc, to make that kind of money.  We hold down other jobs, to pay the bills, and our families suffer as much as we do, for our art.

It’s time to take a stand… So if you’re an artist or author, a friend or family of one, or a fan who wants to see your favorite author/artist/etc continue to create, we need your help.  Follow the link below, sign the petition, and let’s tell the US Congress that being an artist/author IS a business, and we deserve protection and fair regard, as such, under the tax laws.

http://www.ipetitions.com/petition/arts-irc-186-amendment/ (yes, I know the link has a mistake… I hit a “6″ instead of a “3″ when typing in the title, and can’t figure out how to change it).

Tearing Down the American Dream: How American Tax Law Has Failed Creativity

From President Obama’s speech on Intellectual Property:

“We’re going to aggressively protect our intellectual property. Our single greatest asset is the innovation and the ingenuity and creativity of the American people…It is essential to our prosperity and it will only become more so in this century.”

While I know that his speech was in regards to Intellectual Property Rights, with such a bold declaration on the part of President Obama, it comes to my mind that part of protecting the innovation and creativity of the American people comes in offering them some protection from the government, as well.  Namely, protection in tax classification.

Why is there no separate governance for those involved in the creative arts, such as artistry, music, writing, and invention?  These are career fields which more often post high losses long before they post any significant income.  Among authors, the current statistic to post even moderate income (barring a fluke runaway success) is an average of about ten years.  For many, however, this is an optimistic figure at best, and they can go much longer before finally getting to the point where their writing turns more profit than they put out in expenses.

For artists, the window can be even longer.  For singers and musicians, it’s about the same “magic window.”  And inventors can literally spend hundreds of thousands of dollars in development of ideas that never actually make it onto the shelves, before they finally hit on something that is marketable.

Authors, artists, and musicians who aren’t already making big money are often responsible for between 75-100% of their total advertising costs.  They’re also responsible for the costs of any research required in the production of their art, the transportation costs of getting said art to whatever destination it may be showed at, or contracted, with not even a promise that it will indeed be shown or contracted.  They are responsible for all costs of getting their name/brand out to the businesses that might be interested in carrying or producing their works, and for all other expenses incurred in pre-contract/sale as well as many of the aspects of post-contract/sale.  They can rack up literally thousands of dollars in debt, all focused on the belief that their art will one day turn a profit, and all with the belief that they are, in fact, operating a business.  They’re certainly doing much more work than many people who operate “traditional” businesses put into their own businesses.

Yet, the IRS and government want to consign these overworked, often struggling souls, who work long hours at jobs they seldom enjoy, just to pay living expenses and the expenses of their true careers, and who put in even longer hours pounding paths over and over in the hope of getting that elusive contract, to the category of “hobbyist” if they can’t manage to turn a profit for three out of any five years.  They can’t be involved in a real business if they’re not turning a profit, according the government.

It is a mockery of the American Dream, of the ideal of being able to make something of yourself from nothing, to call people who are pouring so much of themselves into a dream they firmly believe to be a business venture, nothing more than tinkering hobbyists.  It cheapens the whole experience of being an American, and makes the ideals for which this country was supposedly founded fail the litmus test for creating successes from ashes.

My challenge to the government of the United States, its taxing agencies, and to each and every American citizen, is to combat this inequity.

To the people, it is time to stand up, and demand that the government re-examine and revise current tax laws, removing artists, artisans, inventors and published authors from the IRC 183 clause of tax law, making all arts and inventions that can be substantiated with evidence of business endeavors to be considered a “for-profit” business, no matter the length of time it takes them to actually turn a profit.

To the Lawmakers and the IRS, I issue this challenge: Support innovation, creativity, and ingenuity — the building blocks of our great nation.  Give artists, artisans, authors, and inventors protection under tax laws, so that they can continue to create, without the costly interruptions of such ridiculous clauses as IRC 183.  Having to deal with the audit processes and headaches involved in the current reading of this particular tax law stunts the flow of creativity, and could make the next great American author or artist give up long before they ever reach their potential.  I challenge you to remember that some of the greatest artists and inventors of all time were largely unknown and uncelebrated in their own lifetimes.  But had they been forced to give up their art due to ridiculous taxation laws that could so easily be amended, we might never have Van Goethe or Da Vinci to admire today, or had Beowulf or King Arthur to read about.

It’s time to stop minimalizing people who are fighting with their every breath for a dream that props up the foundation of the American Dream to which we all aspire.