LYING IN THE GUTTERS VOLUME TWO COLUMN 2
For the last twelve years I’ve been writing a rumour and gossip column while some have insisted I’m the only investigative journalist in comics. A label I was happy to refuse, as I was more interested in providing a column for entertainment.
The birth of my first daughter, Eve, nine weeks ago, gave me the chance to take a sabbatical and consider something new.
So for six weeks, Lying In The Gutters is being run as an investigative journalism column. Just to see what the fuss is all about. Fewer, but longer stories, much less nonsense, maybe a little more substance. And probably the cheeky grin of my former self sneaking through. After the six weeks are up, you’ll be given the opportunity to vote which version of the column you prefer to continue.
Last week was a splashy name-dropping column. Let’s see how things go, when it’s a more sedate topic. Oh, go on then, we can drop some names as well. Maybe a non-comics Doctor Who piece as well.
TAX AND COMIC BOOKS
The two certainties in life are death and taxes. In comics however, despite Joe Quesada’s best efforts, character deaths seem to have a habit of being reversed. They can be ignored fairly easily, safe in the knowledge that things will sort themselves out eventually. Taking that attitude to taxes however is not advised.
Comics is a business, and like any business, publishers pay tax to the government on their profits and business activities, as do their employees on their incomes, whether salaried or freelance. While there are big differences between corporate, salaried and self-employed taxation, the principle holds throughout. But it can get ever so complicated.
It was “Compgate” that brought recent attention to that relationship between tax and comics. DC Comics’ practice of handing complimentary copies of its product to staff members and freelance for research and awareness purposes became a standard way for employees at all levels to bump up their salaries and clear some space, by selling or trading them at nearby comic shops, primarily in New York, but also around the world. Some stores were so well known for this, outsiders wondered exactly how many comics the store actually had to order, as opposed to how many walked through the door. The corporate body turned a blind eye to this use of complimentary product as income, until employees started selling some of the higher end product on eBay. They were let go as a result in according with Sarbanes-Oxley rules on corporate responsibility.
Reportedly, DC President Paul Levitz made assurances at a corporate level that the comp system was a necessary part of business, to keep employees informed of DC’s work and to aid research when creating comic books and as a result was non taxable. However, at the same time, it was reported that DC editor Lysa Hawkins made the opposite case, that the comp system was a necessary perk for lower ranking employees, so they could afford to make the rent in New York. She did this by emailing Human Resources and copying in Paul Levitz, thus removing the possibility of plausable deniability. Lysa was dismissed, the comp system heavily curtailed and a procedure of zero tolerance enforced, which has seen other employees let go.
Similar systems in other companies have not been visibly affected, but DC has often been ahead of the game when it comes to tax. Take the fight for the return of original art from publisher to creator.
When DC Comics started doing this in the 1970s, then later making it explicit in contracts, it recognised what a number of creators had been fighting for, that the publisher wasn’t buying the actual art itself when publishing a comic book, merely the right to publish that art. This wasn’t necessarily an altruistic act on the publisher’s part – it avoided having the until-then-ignored liability of paying sales tax when receiving artwork from artists. If nothing else, it was a good reason to get the right people to do the right thing. Marvel soon followed suit, though it would take a while before they applied that policy to existing backstock of art, and not just new work.
Trickle Down Effect
Of course, this had consequences. Returned art saw a number of creators able to supplement their income through selling that original art. But sales tax was applicable, and income received was declarable.
While most work for publishers will be fully declared and fully paid up, with a strong paper trail from employer to employee ensuring mass compliance on the behalf of the freelancer, the sale of original art is still a grey area, whether original published artwork, commissioned pieces or convention sketches of a couple of bucks. Many creators declare these sales fully, but some do not.
Whether individual or through agents, some lucky creators can add up to fifty percent extra onto their salary. But for some, that aspect is a cash in hand business, considered on par with a garage sale. Which could potentially be a problem in an official audit. There may be no way to hide the style of living, assets etc that the unreported cash sales are generating.
And they should hope that no one is buying their artwork and declaring that as a business expense, another common experience I came across. Because that can create the very paper trial that some may seek to avoid.
Some creators told me they don’t sell any of their artwork at all or charge for sketches, just to avoid the hassle. Others hand their bank accounts to their accountants, and only take payments in cheques to make sure they’re squeaky clean. One creator tells me their accountant’s advice is selling original art is like selling household property, it’s a non declarable source of income. But other accountants tell their creators the exact opposite.
But the average comic book creator who doesn’t declare income or pay sales tax from selling original art is unlikely to attract attention. Forensic accounting is costly and government tax bodies generally don’t have the resources to pursue people for tax evasion unless they can recover enough to make it worthwhile. And for those artists whose work does attract high prices, odds are they have an accountant who makes sure that all tax is paid. But there are those who fall between two stools who may attract attention.
But if a revenue agent or sales tax enforcer wanted to make a fast name for themselves, something like attending San Diego may be provide a bulk-buy opportunity. San Diego itself is a genuine, defacto declarable expense. But advice given to creators conflicts over what else is and isn’t.
Experience In These Matters
B Clay Moore told me, “I will say my wife talked to an IRS agent when I was audited last year, and he basically told her to make sure I wrote off *everything* related to entertainment, including CDs, movies, books, comics (obviously)… Up until then, I’d felt guilty doing so, even though others had insisted I should. But when the Man tells you to do something…
“I still forget to keep the receipts when I buy comics.”
Gail Simone has a slightly different take. “People are always telling me that I can deduct any video I buy, any book I purchase, and any trip I take as ‘research.’ Which makes my accountant laugh out loud.”
Just what is and isn’t deductible will obviously vary if you’re publishing or creating, but lack of agreement over what is and what isn’t taxable seems common across both.
Val Staples has his own warning. “We did a charity comic for Dream Halloween for the CAAF (Children Affected by AIDS Foundation). All art was either donated, or offered for a very minimal fee, which I paid to artists. Printing and such wasn’t donated, but that’s typical. After we completed the book, we were told by the CAAF that we could also use the retail value as a write-off which would be beneficial to the studio. But come tax time, it turned out we couldn’t do that. All we could write-off were the typical business expenses that we had paid for: art costs, printing, etc.
“And that’s okay. We did the book because we cared about the project. The write-off would have simply been a bonus, and we weren’t disappointed in the slightest when it turned out we couldn’t use the retail value as a write-off.
“But for any company who creates charity books for a write-off, they should talk to an accountant.”
One effect of tax on creative work issued is a creator taking on work that they might not have, otherwise. The last week’s column, Alan Moore talked about his upcoming new Avatar project originating from a cashflow problem and a tax bill.
Neil Gaiman had a similar story. “Well, when I moved to the US I found myself paying taxes to both the UK and the US governments (because of the way they stagger payments). And then I got a note from my new accountant in the US letting me know that he’d slightly miscalculated and could I send a cheque for $50,000 to the IRS NOW. THIS MINUTE. Which I couldn’t.
“Now, the day before I’d talked to someone from Tekno comics, asking me to come aboard and create some comics for them. I’d asked them to send me something on paper — expecting a draft contract. That afternoon, sunk in ‘where the hell am I going to get $50,000, I’ve given all the money I had to the UK and the US tax authorities already, and spent the rest on moving across the Atlantic’ gloom, a fedex envelope arrived. I opened it. It contained a cheque for $50,000 from Tekno Comics.
“I decided that something was probably trying to tell me something, and went downstairs and made up Mr Hero.”
And for those creators still worried, don’t be. Getting your house in order is always to be recommended, but the odds are in the current climate, at least one company you’re working for will go bust owing you thousands.
Which is all declarable against tax. Just ask an accountant.
End Of Part One.
DC Comics did not respond to email enquiries before publication.
Heidi MacDonald cleared up Moore’s description of his “V For Vendetta” advance as being “eight grand,” clarifying it as being an option advance. The full figure will run to hundreds of thousands – money which Moore has declined and, as with all his recent movie-adapted works, instructed be passed on to his co-creators on the original project.
It’s possible the transference of “League” rights may not be quite as straightforward as some may believe. It’s been noted before that DC’s creator-owned contracts have a number of loopholes and Moore did state that he didn’t believe the new series couldt be published for at least 18 months.
A few hours after last week’s story was published, Warner Bros. called CBR owner and editor Jonah Weiland and offered him a set visit to “V For Vendetta” in London. Look forward to a report from Jonah sometime in the future.
Aint It Cool ran a follow up piece today, with a negative review of the screenplay quoting V’s first meeting with Evey. Reaction has reached a consensus that it’s rather ludicrous.
The reviewer also reports that at the movie’s denouement, the crowd all wear V’s mask. Because nothing says anarchy better than dressing up in the same uniform.
Reaction to how Alan Moore and DC has dealt with each other, especially over movie properties, also brought attention to Denny O’Neill, Neal Adams and others having concepts and characters they created exploited in the upcoming “Batman Begins,” without compensation. It is likely that this will be addressed by publisher and creators nearer the date of the movie’s launch.
IN OTHER NEWS
In conversation with “X-Statix” inker Nick Craine at the recent Toronto Comics Arts Festival, he announced that Marvel is planning to return the “X-Statix” property in some form. Coupled with Joe Quesada’s recent expressed love for the concept, and writer Pete Milligan’s new profile on “X-Men,” expect to see the media-obsessed satirical mutant book return in the near future in some form.
A second volume of the Heavy Metal-ique anthology book “Event Horizon,” published by Liam Sharp, is planned for November to coincide with the Brighton UK comics convention. The first volume was recently released, including a strip by myself and artist Saverio Tenuta. A second “Chase Variant” script was handed in this weekend. The current lineup for November’s volume includes Glenn Fabry, Alan Grant, Greg Staples, Simon Bisley, Liam Sharp, Steve Niles, Lee Carter, Dave Kendell, Brian Holguin, Raims, Bagwell, Mike Raicht, Brem, Kev Crossley, Emma Simcock-Tooth, Johns Bamber and Howard. The current volume is still available through Diamond Comics Distribution.
“The Cybermen” return for season two of the new Doctor Who, according to casting calls received by London and Welsh actors.
It appears late last year, Rob Liefeld attempted to persuade Marvel to publish Supreme from Marvel’s ICON imprint, stating that Millar helped the pitch and promised to write the first arc. Liefeld states he also discussed the possibility of publishing Alan Moore’s Supreme stories at Marvel with a different artist for the whole run. Marvel turned him down. Liefeld reports this was over a naming conflict with the property “Supreme Power” from MAX. It should be noted that Marvel are happy to publish the “Powers” book from Icon however.
It is likely that such a move would have created considerable hostility from “Supreme” writer Alan Moore, who has opposed his work being published by Marvel, and “Supreme” artist Rick Veitch who claims that Rob Liefeld has neither returned original art or compensated him for losing it.
Full circle for today’s column, I believe.
Neither Marvel, Rob Liefeld or Mark Millar responded to e-mail enquiries before publication. Rick Veitch declined to comment.
For other comic and non-comic book related nonsense, check out the Twistblog.
Discuss this column at the Lying In The Gutters Forum.
And contact me with your tax stories on email@example.com
You can also write to me at 8 Robin Hood Lane, Kingston Vale, London SW15 3PU ENGLAND
Or call me on 0780 135082 from the UK or 01144780 1350982 from the US.
Lying In The Gutters is published every Monday at noon, PST. Except this week because of Memorial Day. And next week because Jonah will be on a plane coming back from London.
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