According To MN State Auditors, Success In The Music Biz Means Signing With A Major Label; Not Touring

Business Models

from the and-if-you're-not-raking-it-in,-you're-not-interested-in-being-successful dept

Have you ever wondered how a tax auditor defines artistic success? Neither have I. In fact, it’s probably one of the great unanswered questions, largely due to its status as one of the great unasked questions.

[The only thing I can think of that comes close to this intersection of red tape and artistic expression took place in 1990, when the members of the electronic/experimental rock band Legendary Pink Dots were denied visas to tour the US due to “lack of artistic merit.” Apparently, the customs official was not familiar with the obscure rockers, despite a release schedule (32 albums, 52 live albums and compilations) that would choke The Fall.]

Now, we have an answer and it’s every bit as awful and ignorant as any collision between a state’s revenue service and an indie artist could conceivably be. This story starts out with the artists (married couple Venus DeMars and Lynette Reini-Grandell) being informed that their Minnesota state tax returns for 2009-2011 were being audited.

No one wants to be in this situation, but most people who find themselves facing an auditor are rarely subjected to unsolicited opinions and advice on how to run their businesses/careers better, along with countless flabbergasting statements about their industry in general.

“We’ve had several meetings with the auditor since November, and at the last one he said a preliminary determination had been made that we were hobbyists, not artists, and therefore could not write off our expenses,” said Venus, a visual artist, songwriter, bandleader and performer. “This has been unbelievably demoralizing. He basically is saying that if we really knew what we were doing, we should have been more profitable by now, and should have known to give up.

Charming. Apparently, Venus and her partner aren’t successful enough to write off expenses. I guess that’s a privilege left to artists with real careers and real expenses to write off. The auditors made the claim that any deductions for touring expenses were nothing more than the couple trying to write off personal vacations. Why would they draw this conclusion? Because they understand nothing about touring.

They also really don’t like that I tour. They say I tour way too much and that really, my name is already out there enough, after all this time in the business, there is now no need to do any promotional touring. I have this statement in writing. I attempted to show them, and tell them that this was the industry standard, approved, well-documented, way to build one’s fan base, to expand on it, to inspire interest in one’s work because of the direct contact one has with an audience. They replied that there’s no reason to return to the same cities and venues, and that I’m wrong, that I’m really touring only for pleasure and recreational reasons.

After “all this time in the business,” the Rolling Stones are still touring. Perhaps they should stop. After all, their name is “already out there enough.” Touring is the expectation when you’re a musician. It can be a lifetime experience for some. Hopefully, these artists aren’t a.) Minnesotans or b.) writing off touring expenses. (Nothing says “vacation” like a panel van full of equipment, band members and BO making a 6-hour run across the state on less than 2 hours of sleep. Relaxing!)

So, according to reps from the Minnesota revenue service, Venus DeMars hasn’t achieved enough success to justify listing “artist” as an occupation, but is too successful to gain anything by touring. As an ideal, “success” is a pretty vague term. How do tax collectors define success in the music biz?

The tax guy said that by this point in my career I needed to be signed by a major label, that I should have been signed to a major label by now, that I needed to be signed to a major label to establish myself. [He said that] there was no evidence that I was actively sending my records to major record labels, so therefore I must not be interested in profit, and not running a for-profit business.

How delightfully old school. You can’t spell success without the letters EMI (or UMG). While some musicians may not feel they’ve “made it” until they’ve signed away their rights to their creations signed with a major label, it’s been a long time since the two terms were inseparable.

What we seem to have is someone (or someones) who don’t understand the realities of the music business setting arbitrary ground rules on what constitutes a career in the music field, or at least what defines a career in terms of acceptable tax writeoffs. Touring is unimportant but a major label contract is everything. The auditors also made the claim that because DeMars allowed her music to be used on a public radio network (NPR), it meant she was uninterested in turning a profit.

Her partner, Lynette Reini-Grandell, didn’t dodge the entire state vs. art “debate,” either. The state’s reps also questioned her business acumen as a writer.

The tone of all these proceedings have been completely anti-art. There has been an emphasis on creating a product, advertising it for sale, and then selling it. That’s not how it works on the creative end of literature. Writers need to spend a long time writing, getting feedback, moving up the levels of critique, and then they participate in the publishing industry by sending things out to publishers. One tries for the prominent ones first, gets rejected many, many times, and eventually finds a press and an audience.

Writers do not write a few lines and then advertise they have a poem for sale, making sure that the poem sells at a break-even point of what it cost monetarily to produce it. But this is what the Minnesota Department of Revenue insists I should be doing. It sickens me to have to participate in this because I know it is deeply wrong.

At this point, the state is telling the couple they owe over $100,000 in back taxes, an amount that may include a clawback of issued grants. This assessment seems to be based on the auditors’ assertion that the couple simply isn’t trying hard enough to make money. Based on what the state’s representatives have said, not making enough money is the same as dodging taxes. But, even if you take the hardline and agree with the auditors’ that the couples’ livelihoods aren’t sustainable without significant government assistance, you’re still left with some unbelievably bad assumptions by the auditors and even worse career advice, all delivered in a thoroughly condescending manner. If the state is looking to recover these taxes, it needs to apply a more intelligent baseline than “stop touring and sign with a major label.”

Filed Under: minnesota, tax, venus demars