Important Tax Legislation for Visual Artists Makes Headway in Congress

While art collectors can get tax breaks by donating artwork to charity, the artists themselves cannot under current law. Ironically, under current federal tax law, the creators of masterpieces are only able to write off the actual costs of the materials, regardless of the fair market value of the pieces. That may change if legislation currently under consideration in Congress continues to make headway.

The U.S. Senate passed legislation in mid-November to provide artists with a full fair-market value charitable deduction for donated artwork. The bill, S2020, the "Tax Relief Act of 2005," includes a provision that would provide artists with a full fair-market value charitable deduction for the donated gifts of their works to museum and library collections.

Efforts to give artists equal footing with art collectors concerning donation of artwork is not a new concept. According to legislative experts, the artists' deduction bill has been pending approval in Congress for several years, but never made it through both the Senate and House of Representatives. The recent provision was pushed by Sen. Patrick Leahy (D-VT) and strongly supported by Sens. Robert Bennett (R-UT), Charles Schumer (D-NY) and Pete Domenici (R-NM).

U.S. Senate approval is an early hurdle for the artists' tax provision in the overall tax bill. The House version of the tax bill--HR 4297--approved by the House Ways and Means Committee does not include the artists' deduction provision. Such a provision must be included and then approved by the House when it takes up its version of HR 4297 or, more likely, in the final agreement for the tax legislation after a conference committee with the Senate.

For more information, see website updates from the National Assembly of State Art Agencies at: http://www.nasaa-arts.org/nasaanews/tax_bill.shtml