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Entertainment Industry Urges Congress to Expand Business Expense Deduction

Posted on Apr. 29, 2020

Groups representing entertainment workers and other performing artists are urging congressional leaders to support legislation that would enable more of their members to take advantage of an existing work expense deduction.

In an April 27 letter to House and Senate leaders, the groups said H.R. 3121 (the Performing Artist Tax Parity Act), introduced in June 2019 by Rep. Judy Chu, D-Calif., would help employees in the entertainment industry who "have been devastated by the financial impact of COVID-19 with a complete shutdown of production and live performances."

The bill, cosponsored by Rep. Vern Buchanan, R-Fla., would modify the qualified performing artist tax deduction, an above-the-line federal deduction for work-related expenses by performing artists. At present, the deduction is limited to employees with an adjusted gross income of $16,000 or less. H.R. 3121 would increase the threshold to $100,000 for single filers and to $200,000 for joint filers and would phase out the deduction as income exceeds those levels.

Both Chu and Buchanan are members of the House Ways and Means Committee.

The groups argued that the deduction's $16,000 AGI limit is outdated, noting that it hasn’t been adjusted since the deduction was enacted in 1986. H.R. 3121 would modernize the deduction and allow "entertainment industry workers to keep more of their hard-earned money," according to the letter, which was sent to House Speaker Nancy Pelosi, D-Calif.; House Minority Leader Kevin McCarthy, R-Calif.; Senate Majority Leader Mitch McConnell, R-Ky.; and Senate Minority Leader Chuck Schumer, D-N.Y.

“With the deadline to file income taxes moving to July, hundreds of thousands who have not already filed their taxes could benefit if H.R. 3121 were included in any [federal] relief package,” according to the letter. Notably, the letter said a similar provision is included in S. 3232 (the Promoting Local Arts and Creative Economy Workforce Act of 2020) introduced by Sen. Brian Schatz, D-Hawaii, in January.

The groups that signed the letter include the Screen Actors Guild-American Federation of Television and Radio Artists, the Actors’ Equity Association, and the International Alliance of Theatrical Stage Employees. They argue that unlike many other employees, “entertainment industry employees can spend on average 20–30 percent of their income on industry-related expenses such as agents, managers, promotional material, equipment, and travel,” without receiving reimbursement.

Miscellaneous itemized deductions were previously used to address those costs, but the 2017 Tax Cuts and Jobs Act “increased the standard deduction and eliminated those provisions, preventing entertainment employees from deducting their ordinary and necessary business expenses,” according to the letter. The changes resulted in “an industry-wide tax increase for working class creative professionals,” the letter said.

In a release announcing the legislation, Chu’s office argued that the loss of miscellaneous itemized deductions increased taxes on many entertainment industry employees by thousands of dollars per year, describing it as an “untenable hit to working families.”

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