A Room With A View…and a 1099
By Robyn Guilliams Dear Law and Disorder, I have been in artist management for a long time, thought I had seen it all, but something just came up for one of my artists that has me completely stumped. My client was sent a 1099 for a hotel stay that the presenter provided for an engagement. Most presenters that I work with pay for the hotels, but never once has the value of that hotel been included on the 1099 that the artist was sent. This particular place is a big resort, they too are the presenter. They often trade rooms for fees (it’s a very exclusive resort!), or they give small fees plus the accommodations (which includes meals), usually for two nights as a perk to the artist. It gets tricky for the artist, because they don’t pay for the hotel, so they have no expense to write off for that income. So that may mean they end up paying tax on that amount, thereby losing money doing this performance. That’s where this goes wrong for the artist, in my opinion. Artists obviously do this gig because of the resort. But, this has left a bad taste. What’s up with issuing the 1099? They say it is an IRS law that says hotel costs are income for the artist. By the way, they don’t tell you this up front…Searching for the Truth Dear Searching for the Truth: The answer to your question depends on the specific facts of the situation. (A lawyer’s favorite answer to every question is – “It depends”!) Generally, if a presenter provides accommodations to an artist as part of the artist’s compensation, the value of the accommodations is NOT considered taxable income to the artist, if the accommodations are reasonable and necessary. For instance, if an artist is travelling from California to New York to play one show, the presenter providing the artist with two nights of hotel accommodations is reasonable and necessary. The value of the hotel accommodations in this instance would not be considered taxable income to the artist, and need not be included on the 1099. On the other hand, if a pianist travels away from home to play a concert and the presenter provides hotel and airfare for the pianist, her husband, her sister, her sister’s next-door neighbor, and the next-door neighbor’s pet monkey, this is not reasonable and necessary. The value of the airfares and accommodations for everyone except the pianist would be considered taxable income and SHOULD be reported to the artist on a 1099. Unfortunately for your artist, there are a few comments in your letter that indicate that the accommodations at the resort exceeded the “reasonable and necessary” standard. You state that the artists at this resort often accept accommodations in lieu of fees, or accept smaller fees plus accommodations. Why would an artist accept no fee, or a substantially smaller fee, if the artist wasn’t receiving something of value (in addition to the hotel room) in return? Plus, you mention that artists “do this gig because of the resort”… and the presenter provides “two nights as a perk to the artist”. Again, the artist is receiving something of value besides the usual hotel accommodations. If an artist is receiving a significant personal benefit from the accommodations besides a place to lay his head after the show (such as the opportunity to enjoy resort amenities or an extra night of accommodations), then the value of the accommodations constitutes taxable income and must be reported. You say that it’s tricky for the artist, because he has no expense to write off his income. But wouldn’t this be the case if he was receiving his usual fee plus a regular, non-resort, hotel room? I’d suggest that in the future, unless your artist understands the taxable “value” of receiving resort accommodations, including the included room service and use of the infinity pool, have him stay at the Motel 6 down the street. _________________________________________________________________ For additional information and resources on this and other legal and business issues for the performing arts, visit ggartslaw.com To ask your own question, write to firstname.lastname@example.org. All questions on any topic related to legal and business issues will be welcome. However, please post only general questions or hypotheticals. GG Arts Law reserves the right to alter, edit or, amend questions to focus on specific issues or to avoid names, circumstances, or any information that could be used to identify or embarrass a specific individual or organization. All questions will be posted anonymously. __________________________________________________________________ THE OFFICIAL DISCLAIMER: THIS IS NOT LEGAL ADVICE! The purpose of this blog is to provide general advice and guidance, not legal advice. Please consult with an attorney familiar with your specific circumstances, facts, challenges, medications, psychiatric disorders, past-lives, karmic debt, and anything else that may impact your situation before drawing any conclusions, deciding upon a course of action, sending a nasty email, filing a lawsuit, or doing anything rash!
Tags: gig, hotel accommodations, hotel costs, hotel stay, hotels, irs, irs law, Robyn Guilliams, taxable income, travel