Hi, Curious ~
What an interesting undertaking! I suspect it will be a challenging
and sometimes frustrating experience to sell your artist's paintings.
I'll answer your questions, but they may not necessarily be in the
order you asked them.
1.) Agent.
The relationship you are entering into is as the artist's agent. Law
governing your agreement with the artist to sell his product is
referred to "agency law".
Law.com's legal dictionary defines "agent" as follows:
(see: http://dictionary.law.com/ search word agent)
"agent n. a person who is authorized to act for another (the agent's
principal) through employment, by contract or apparent authority. The
importance is that the agent can bind the principal by contract or
create liability if he/she causes injury while in the scope of the
agency. Who is an agent and what is his/her authority are often
difficult and crucial factual issues."
2.) Agreement between agent and artist.
As the agent for the artist, problems can arise, so it would be a good
idea to written agreement laying out all the terms of the agreement.
Without scaring you to death, the following is taken from the
Southwest Arts site "How to Hire An Agent"
( http://www.swa.co.uk/info/vac59.htm )
"...it is essential that each party understands each other's position
and expectations. A contract needs to be finely tuned to suit each
party ... as this sets out the various issues which need to be covered
when making a legally-binding arrangement."
"Broadly, an agreement must cover the following issues:
- Will the agent deal only with selling, or will the arrangement
include publicity ... arranging exhibitions or approaching galleries?
- Does the agreement apply to all the art work [the artist] currently
has available, or are there certain sets or types of work that you
wish to exclude?
- Does it include licensing copyright to use [the] images and ...
control the purposes for which they will be used?
The contract might also include "... a specification of the kinds of
promotion, ... hiring a gallery or exhibition space" and the
geographical area."
Please notice in the rest of the page the areas of concern for the
artist, and you can easily turn those concerns around and apply them
to yourself as agent and whether or not these are going to be a
concern."
There are several sources of information (and forms) compiled by New
York's Volunteer Lawyers for the Arts, which you can find on the Arts
Council of Buffalo site, here:
http://www.artscouncilbuffalo.org/artist_resources/legal_books.asp
Advice on preparing agent agreements and/or choosing an agent mentions
expenses involved in selling an artist's work, and which expenses are
borne by either party. That is, what expenses are included in an
agent's commission, and what expenses will be paid by the artist in
addition to the commission.
The Scriptwriter article, "All You Need To Know About Agents But Were
Afraid To Ask" gives a very good explanation of those considerations.
(See Scriptwriter's article,
http://www.scriptwritermagazine.com/legal6.htm )
3.) Provenance - Artist's statement.
Transferring ownership to the buyers will require some paper work,
especially the artist's statement that he is transferring an original
work of art. The Young Artists Gallery site has some excellent forms
which are adaptable for your use. The forms are at:
http://www.youngartists.com/contract.htm
4.) The commission you earn on selling the artist's paintings are
considered income and are taxed as such. For US citizens, the IRS
Website ( http://www.irs.gov ) has all the forms and information you
will need, whether you operate as a small business sole
proprietorship, corporation or some other type of business entity.
Information and the forms you would need from the IRS are at:
http://www.irs.gov/businesses/small/article/0,,id=99200,00.html
A 10% commission on a $1million sale would be $100,000.
Small Business Taxes & Management has tax rate tables on that amount
here:
( http://www.smbiz.com/sbrl001.html#pis02 )
As you can see from the tables, the tax rates on that amount for a
single person would be, $14,625.00 + 30% of the amount over $67,700.
The Tax Rate Tables will give you the amounts for other filing status.
You didn't say which country or state you reside in, but most
governments and states have similar information online for you to
estimate the taxes on your sales.
5.) Percentages for non-profit organizations.
You didn't indicate who was making a percentage donation to the
non-profit agency, you as the agent or the artist from his net profit
from the sale. In either case, this would qualify as a deduction to a
certain amount (percentage) as a deduction on tax returns.
If you are talking about selling a single work for $1million, you are
talking large income amounts. Google Answers Researchers do not give
legal or professional advice, and the information in this answer is no
substitute for careful planning with a tax pro to help you keep as
much of your income as possible.
Likewise, taking into consideration the amounts you mentioned, the
answers here to a question you feel is worth $19.50 are informational
only. This informationi was found on the Internet and is general in
nature. You have been given some considerations to think about in
drafting an agreement with the artist. This is no substitute for
consulting an attorney who specializes in agency law who can assure
what your formal agreement is what you really think it is.
An ounce of prevention now will be far better than a huge disagreement
later which can escalate into a major lawsuit, making the lawyers
richer, and someone far poorer.
Search terms used:
agency,
agency law
arts agent
definition: agent
forms agent agreements
forms arts agent agreements
provenance
artist's statement of original work
commission income
tax rates
I hope I've at least pointed you in the right direction.
Yours ever so,
Serenata |
Clarification of Answer by
serenata-ga
on
21 Feb 2003 05:46 PST
Hi again and thank you for clarifying that.
1. With regard to sales taxes on the paintings themselves -
The sale of original works are subject to state and local taxes,
including possible "use taxes" (which by way of explanation are
similar to the taxes imposed on motor vehicles) which may be imposed
in your jurisdiction. Amounts collected as sales and use tax must be
paid to the respective taxing authorities.
Some states and localities offer exemptions for the sale of original
works of art; and if you sell the work to a charitable organization,
foundation or educational facility, they are likely to be exempt from
paying such taxes. This is determined by the physical location of the
sale and sometimes by where the original work of art will end up. If
you sell to an organization exempt from such taxes, they will give you
their exemption number and you would report that accordingly.
The Coalition of Virginia Nonprofits offers a comparison of sales and
use taxes by state here:
http://www.cvnp.org/statescomparison.pdf
2. So far as donating amounts from the proceeds from the sale -
For federal income tax purposes, charitable deductions are limited to
an amount up to 50% of your adjusted gross income, and this is limited
to year you make such donations or in a carryover year, depending on
the nature of the donation.
IRS Publication 526, "Charitable Donations", has information on the
restrictions. This publication is available online, and the limits are
discussed on page 9. It can be found at:
http://www.irs.gov/pub/irs-pdf/p526.pdf
State limitations on charitable contributions are usually close to the
Federal limitations. Most states have their contribution levels online
as well.
To summarize:
Sales taxes on the original works of art are governed by the place of
of the sale (usually state and locality). A use tax may be imposed,
depending on where the art will end up. If such taxes are collected,
they must be paid to the governing body.
Personal income tax deductions to charitable organizations are limited
to up to 50% of your adjusted gross income (that is, your income minus
the allowable deductions and credits) and would be reported there.
I trust this clarifies the answer for you.
Search terms used:
sales/use taxes
taxes original works of art
taxes art work
IRS Search terms:
charitable donations
charitable donation limits
Serenata
|
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