DJGold

djdonny

Here's a portion of an email I received from a business owner many of us know (who shall remain nameless). He collects $75 deposits and then sends DJs out to gigs nationally, where they are paid upon arrival by the clients.

Quote: You ONLY need to inform us of money we have paid to you that is over $600 for the year:
If you collect the money from the client at the event -- you are liable to declare that yourself as that money has been paid directly to you by the client and not us:
The ONLY time that you need a 1099 from us is when a client pre pays the balance to us and we send you the balance

IMHO, this is clearly misinterpreting the tax code. Comments?

TheBartman47 · Posted: Thu Jan 04, 2007 8:54 pm Post subject:

If you do more than $600 for said contracting company throughout the year, then you need to fill out a 1099. If there's only one gig and it's under $600, then no 1099 is necessary.

djdonny · Posted: Thu Jan 04, 2007 10:48 pm Post subject:

Bartman,

That part I know. This is the part I question:

Quote: If you collect the money from the client at the event -- you are liable to declare that yourself as that money has been paid directly to you by the client and not us:
The ONLY time that you need a 1099 from us is when a client pre pays the balance to us and we send you the balance

The way I understand this business's method is: the client books the DJ through the national "DJ Company" for a $75 deposit. The national office calls a local DJ to play at the event, and when a DJ is found, the national office enters into an agreement with the client. The client then pays the local DJ at the start of the event (money order or cash only). To me, that local DJ is clearly an independent contractor. But not according to this national agent's email.

I know at least one member of this board has worked for this agency, so correct me if I'm wrong on the procedure.

TheBartman47 · Posted: Fri Jan 05, 2007 11:42 am Post subject:

Yes, that is a contractor to me too. What is this national office calling them if not contractors?

DJ Teddy Bear

djdonny wrote: I know at least one member of this board has worked for this agency... You're probably talking about me.

I only did one event for the agency. For less than $600. Had I done more, I would expect a 1099 regardless of who paid me.

I'm not sure of the legal differences between sub-contractor and independent contractor - if any. Or employee for that matter (although I'm certain we don't fall under the employee category.)

The agency provides the client a contract. The client is the agency's customer. The agency will be the one the client sues if the DJ is a no-show. Therefore, the payment, regardless of how the client writes the check, is a 1099 responsibility of the agency.

djdonny wrote: He collects $75 deposits and then sends DJs out to gigs nationally, where they are paid upon arrival by the clients. BTW: It is the agency's policy that the client pay the DJ 14 days prior.

djdonny · Posted: Fri Jan 05, 2007 7:37 pm Post subject:

Teddy Bear,

Thanks for the clarification. (Yes, it was you I was thinking of.)

Just a note: I really think this agency's existence is to the detriment of the entire DJ industry. I wonder if it would benefit all of us to bring its practices to the attention of the IRS. I hate being a snitch, but there are ethical and moral grounds to being one in a case such as this.

DJ Teddy Bear · Posted: Fri Jan 05, 2007 11:45 pm Post subject:

djdonny wrote: I really think this agency's existence is to the detriment of the entire DJ industry. As do I. I did it primarily out of curiosity.

Unless the rates go up significantly, I won't be doing it again.

Don Niles DJ

I believe in some instances,the Client pays the Sub-Contracting Agency Directly and then the Agency cuts a check to the DJ...There was a second E-Mail clarifying this...If all of your payments in the year were directly from the client at the event,then no 1099 need be issued....This Agency offers certain benefits to someone like me who does not have their own website.

DJ Teddy Bear · Posted: Sat Jan 06, 2007 11:21 am Post subject:

The agency's policy helps the subcontracting DJ hide income from the IRS.

IF there is less 1099 income, there is less to report, less to pay taxes on.

Obviously, that's all illegal.

What is not obvious is that there is no benefit to the agency to do this. Obviously the agency isn't reporting all the balance due payments that are paid directly to the DJ on their own income tax. But if they did, they could easily report all the 1099s it generates, resulting in no extra taxes from what they are currently doing.

In fact, if they ever got audited, and the auditor added up the value of all the contracts, there would be an awful lot of unreported income to talk about.

Don Niles DJ

If a DJ were going to choose to hide income to begin with,Why would he pick something where there was a definite paper trail such as these Contracts both between the Agency and the Client and the Agency and the DJ? I don't see any difference between Collecting money from a client at an event whether it was one I booked myself or through this Agency as long as it is the Client who pays me. I am for the most part just using the Agency's Website as a booking tool in lieu of my own.This agency only accounts for a small portion of my bookings to begin with..2 in 2006..1 Confirmed for 2007..Most of my bookings are generated through Word of Mouth,Venue Referrals, Name Recognition from being a Radio Personality,Yellow Pages and a few Internet sites one of which is this Agency...And Yes,I know..I need a Website..I just can't decide what I want or how to put it together so this agency is the easy way out...I know DJ's whose websites I think do them more harm than good.

djdonny · Posted: Sat Jan 06, 2007 1:00 pm Post subject:

Quote: But if they did, they could easily report all the 1099s it generates, resulting in no extra taxes from what they are currently doing.

Probably not. Since most of his DJs only get one or two gigs a year (and even the 2-gig-a-year DJs may not break $600), he wouldn't send out 1099s to them. So if he books 500 different DJs a year at $300 apiece, that's $150,000 a year income and not a single 1099 that needs to be sent out. So, if he did declare that income, he'd almost certainly want to send out 1099s to every DJ. Using the current policy, for 500 bookings at $75 per, he makes $37,500 a year; hopefully, he declares at least that much as income!

len · Joined: July 2nd, 2005 Posts: 98

DJ Teddy Bear wrote: BTW: It is the agency's policy that the client pay the DJ 14 days prior.

That must be cumbersome to track.

As for the 1099 issue, I'd talk to an accountant.

DJ Teddy Bear

djdonny wrote: Quote: But if they did, they could easily report all the 1099s it generates, resulting in no extra taxes from what they are currently doing. Probably not. Since most of his DJs only get one or two gigs a year... Yes and no. At an audit, they could show copies of the 1099s that DID go out, and a report showing all the under $600 accounting. But their current policy is obviously designed so they do not have to report, or deduct, all that paper income. As such, they would get destroyed by an audit.

len wrote: DJ Teddy Bear wrote: BTW: It is the agency's policy that the client pay the DJ 14 days prior. That must be cumbersome to track. There's really no need. They periodically send emails reminding the DJs that it is the DJs responsibility to collect before the gig, or suffer the consequences of performing for free. They will not provide much help getting payment after the event.

tcmusicentertainment · Joined: January 4th, 2008 Posts: 2 Location: Derry, NH

This has been helpful for me to look at because I have a couple gigs that iI receivd from a dj company but I get paid by the company not the client.
I got 2 gigs so far this year and I have made over the 600 dollar mark.

SteveCie

One of the problems our industry faces is the hobbyist deejay who works for slave wages and reports none of the income.

Those of us who earn our living from our DJ businesses, have more than enough legitimate business expenses to allow us to file our Income Tax without going broke in the process.

Get a good tax consultant or accountant and set up your business legitimately and you will never need to worry about the Internal Revenue Service. We all need to pay our fair share of taxes.

As for whether or not you receive a 1099 form from a client, booking agency, or from a deejay service sub-contracting to you, you should always opt to report the income since there exists a paper trail from the party of the first part, and you will want to be clear should that party get audited. :idea:

djmc · Posted: Thu Jun 05, 2008 9:30 am Post subject:

The contracting agency is ONLY liable for the amount received in deposits.

In the case mentioned (above), the entire balance at the event is paid DIRECTLY to the performing DJ in his name only.

Under this scenario, there is no 1099 required.

DJ Teddy Bear · Posted: Thu Jun 05, 2008 5:21 pm Post subject:

The agency in question reminds the DJs that it's up to them to collect the balance due. And says they won't help (much) if the DJ doesn't collect and does the event anyway.

Why is this their policy? Not because of the obvious common sense reasons, but because there is no contract between the DJ and the client. I.E. The client is NOT the DJ's customer.

At the one event I did, I elected to collect at the event rather than 14 days prior. But I collected before starting. The client asked me who to make the check to, and was surprised when I told her to use my name rather than the agency name.

Add it all up and the agency IS responsible for 1099s.

djmc · Posted: Thu Jun 05, 2008 6:27 pm Post subject:

If the contract specifies: (1) deposit is paid to the contracting agency, and (2) balance due will be paid directly to the performing DJ.... How clear does it have to be?

It doesn't make sense, from an accounting standpoint because someone on the "cash basis" would not receive any $$ from the balance due, therefore its the performer's responsibility to report said income.

As long as the client is willing to pay checks or cash to different entities, this method of reporting is acceptable, provided the Independent Contractor checkpoints are met: independent work hours, own transport, own equipment, own music, not told how to do the job*

*my own Independent Contractor agreement is worded in such a manner that, basically, a sub of mine is allowed to play cheese or not as they see fit... I cannot restrict their performance or apply cookie cutter guidelines. As soon as I restrict a sub's song plays, this makes them an Employee and no longer a Sub.

Take a different scenario:

Corporate client insists on paying BOTH checks to the same company (for accounting reasons). When this happens, the booking DJ company reports ALL the $$$ and then would issue a check (and a 1099 if over $600) to the performing DJ.