Tax

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NAMM monitors tax reform issues and provides periodic updates on advocacy efforts and pending legislation. For up-to-date information on this issue, please visit this page regularly.

Latest Updates as of July 27, 2022

California Competes Tax Credit (CCTC)

The state of California is offering an income tax credit to businesses that want to locate or stay in and grow in California. All industries of any size may apply for more than $180 million in tax credits during one of the three application periods. Businesses will be selected based on several different factors. Of note is the number of full-time jobs created, the amount invested, and the strategic importance of the business to the state.

Application Periods

  • July 25-August 15, 2022
  • January 3-23, 2023
  • March 6-20, 2023

Evaluation Factors

  1. The number of jobs the business will create or retain in this state.
  2. The compensation paid or proposed to be paid by the business to its employees, including wages, benefits, and fringe benefits.
  3. The amount of investment in this state by the business.
  4. The extent of unemployment or poverty where the business is located.
  5. The incentives available to the business in this state, including incentives from the state, local government, and other entities.
  6. The incentives available to the business in other states.
  7. The duration of the business’ proposed project and the duration the business commits to remain in this state.
  8. The overall economic impact in this state of the applicant’s project or business.
  9. The strategic importance of the business to the state, region, or locality.
  10. The opportunity for future growth and expansion in this state by the business.
  11. The training opportunities provided to employees.
  12.  The extent to which the anticipated benefit to the state exceeds the projected benefit to the business from the tax credit.
  13.  The extent to which the credit will influence the applicant’s ability, willingness, or both, to create new full-time jobs in this state that might not otherwise be created in the state by the applicant or any other business in California.

Additional Information

California Competes Application Workshop PPT

California Competes Tax Credit Information

CCTC FAQ

Email CCTC

Contact CCTC via Phone: 1-916-322-4051

 

3/29/22: NAMM Endorses the Performing Artist Tax Parity Act: Provides tax relief for musicians, other performing artists

NAMM is pleased to support the Performing Artist Tax Parity Act (H.R. 4750 and S. 2872); federal legislation which would restore and update a tax deduction to help performing artists deduct business expenses. The legislation is sponsored in the House by Reps. Judy Chu (D-CA) and Vern Buchanan (R-FL) and in the Senate by Sens. Mark Warner (D-VA) and Bill Hagerty (R-TN).

A provision in the Tax Cuts and Jobs Act of 2017 largely eliminated the option to claim miscellaneous itemized deductions that allowed many performers and other artists to deduct work expenses not covered by their employers. As a result, many artists ended up paying more in taxes since the costs of instruments, equipment, travel, and other business-related costs were no longer deductible.

To address this problem, the Performing Artist Tax Parity Act would revise and expand the Qualified Performing Artist (QPA) tax deduction. QPA allows eligible performing artists, such as musicians, actors, and others employed in the performing arts, the option to take an “above the line” deduction for unreimbursed expenses. But the current adjusted gross income maximum threshold for the QPA deduction is just $16,000 - a level unchanged since QPA’s inception in 1986. The current threshold, as established more than 50 years ago, severely limits the number of individuals eligible for the QPA deduction. The legislation would make business expense deductions more widely available by modernizing the QPA’s income thresholds.

The bill increases the income level to $100,000/single taxpayer and $200,000/joint filers, adds a built-in phase-out of the deduction and provides threshold income increases based on the Consumer Price Index. With these revisions, more lower and middle-income performers would be eligible for the QPA deduction.

Congressional sponsors are seeking to advance the bill this year, possibly through inclusion in an end-of-the-year tax measure. In addition to NAMM, supporters of the legislation include the American Composers Forum, Americans for the Arts, Actors’ Equity Association, American Federation of Musicians, League of American Orchestras, SAG-AFTA and the Motion Picture Association. NAMM will continue to monitor this issue and will post updates here as they are available.

 

  • 5/7/21: U.S. Dept. of Labor Withdraws Independent Contractor Rule

The U.S. Department of Labor officially withdrew the “Independent Contractor Rule” effective May 6, 2001. The rule, adopted by the prior administration, would have made it easier for businesses to classify workers as independent contractors rather than employees.

Under the Fair Labor Standards Act (FSLA), covered employers are required to pay employees at least the federal minimum wage and overtime compensation. These FLSA requirements do not apply to independent contractors. Independent contractors, however, typically have more flexibility to set their own schedules and can work for more than one company.

According to the Department’s press statement, it is withdrawing the rule for several reasons, including:

  • The independent contractor rule was in tension with the FLSA’s text and purpose, as well as relevant judicial precedent.
  • The rule’s prioritization of two “core factors” for determining employee status under the FLSA would have undermined the longstanding balancing approach of the economic realities test and court decisions requiring a review of the totality of the circumstances related to the employment relationship.
  • The rule would have narrowed the facts and considerations comprising the analysis of whether a worker is an employee or an independent contractor, resulting in workers losing FLSA protections.

For the near term, it appears unlikely that the Department of Labor will re-examine or issue rules that could ease criteria for classifying workers as independent contractors.

The official notice of the rule’s withdrawal is published in the Federal Register.