The Help Independent Tracks Succeed (HITS) Act is making progress in Washington. On Thursday, Sens. Dianne Feinstein (D-Calif.) and Marsha Blackburn (R–Tenn.) introduced to the Senate a companion bill to the HITS Act that was brought before the House in July. Like the House version, this would allow musicians, technicians and producers to deduct up to $150,000 in recording expenses on their taxes in the year they’re incurred.
Under the current tax code, music creators are required to amortize production expenses for tax purposes over the economic life of a sound recording, a period that usually ranges between three and four years. If passed, the HITS Act would apply the same tax standard to music as it does film and TV productions, which already enjoy a 100% first-year deduction.
Trending on Billboard
“Because most large, public gatherings have been prohibited since the pandemic began, musicians and music producers have been among the hardest hit by the coronavirus,” said Feinstein in a statement announcing the legislation. “Our bill would provide relief by allowing independent musicians, technicians and producers to deduct their production expenses in the same year they occur, rather than forcing them to spread those deductions out over several years. This is in line with how expenses are treated for film, television and theater productions, and it makes sense to create parity for music productions.”
“Singers and songwriters lift our spirits and now need our help to get past the pandemic,” added Blackburn. “These artists are the lifeblood of Nashville’s creative community. This bipartisan legislation will provide additional tax deductions to ease the burden facing our creative community by allowing our independent artists to fully deduct the cost of producing their music.”
Recording Academy chair and interim president/CEO Harvey Mason Jr. released a statement lauding the Senate bill, saying it will lay “the groundwork for creators to produce new music and create jobs amidst a year filled with economic uncertainty.”
“This change in the tax code – similar to the tax treatment of other creative industries – will incentivize more music production,” Mason Jr. added. “The Recording Academy thanks Senators Feinstein and Blackburn for their leadership on this issue and for introducing the Senate companion to the House bill, which already enjoys broad, bipartisan support.”
According to a June survey by the Copyright Alliance cited in a press release announcing the bill, 88% of creators had lost income due to COVID-19, more than double the national average for other industries. Roughly half of the survey’s respondents said they had lost 90% or more of their income.
“The American Association of Independent Music [A2IM] and its more than 700 record label members across the country are grateful for the support of Senators Feinstein and Blackburn in introducing the HITS Act,” added Dr. Richard James Burgess, president and CEO of A2IM. “In the face of the pandemic, musicians across the country are struggling to make a living and support their families, in part because they can’t tour or play live shows. The tax incentives contained in the HITS Act are designed to get musicians back into the recording studio by treating the costs of making a sound recording the same as production costs for other creative content. This is a common-sense, bipartisan, fiscally responsible measure that would be a great step forward for indie music, and thousands of artists in California, Tennessee and across the nation.”
The HITS Act’s introduction in the Senate comes at a time of increasing desperation for the industry, whose live sector in particular has been devastated by the ongoing pandemic. On Nov. 23, a coalition of industry groups including the RIAA, NMPA and Artist Rights Alliance sent the latest in a series of letters pleading with congressional leaders to provide additional government assistance to struggling music workers. In addition to passage of the HITS Act and the Performing Artist Tax Parity Act, the letter called on Congress to renew and extend several forms of federal pandemic unemployment assistance; pass the RESTART Act federal loan program; and fix flaws in the CARES Act that prevent mixed earners from receiving unemployment assistance, among other requests.
