04/27/2014 10:13 am ET Updated Jun 27, 2014

Artists' Assistants and the IRS

Not a trick question: Are artists' "employees," or are they "independent contractors"? There are reasons why artists may want them to be a little bit of both. Many employers, including artists, prefer to forgo the paperwork and payment of employee taxes (withholding unemployment insurance and social security, among others) by labeling those who work for them independent contractors. The IRS simply needs to receive a 1099 tax form from the employer for the independent contractor, listing the amount paid to that person, who is otherwise responsible for reporting his or her own income and paying estimated taxes on that amount.

Attempting to make the issue of who is an employee more black-and-white is the Internal Revenue Service, which initiated a drive in 1995 to collect unpaid taxes from employers in all sectors of the economy for independent contractors who are actually salaried employees. "There has been concern for some time about compliance with IRS guidelines," said a spokesperson for the federal agency. "Some employers aren't withholding taxes as they should, and some aren't even filing 1099s for the people they claim are independent contractors."

For artists, the IRS action has meant that they must establish a new relationship with their assistants, one that involves more structure and accountability than the traditional flow of artistic help in and out of their studios. "The IRS wants to make everyone who works for me employees," said painter Tom Wesselman. "To my mind, everyone who works for me are independent artists, who work out of their own studios as well as in my studio. They have their own income apart from me and deduct the costs of their own materials and studios. The IRS is causing complications for me and for a lot of other artists who hire assistants."

New York City accountant Rubin Gorewitz also noted that "an artist's studio isn't like General Motors or AT&T. The people working in the studio are more involved specifically in the arts and are hired for their aesthetic sense, which they pursue in their own art." He added that, increasingly, "I tell artists to hire a business manager who will be in charge of the employees and who can see that things get done so that the artists can do their own work."

Accountants for a number of major artists have been busy readjusting the payroll taxes for the assistants their clients employ. One who came into conflict with the IRS over the issue of independent contractor versus employee was Seattle glassmaker Dale Chihuly. Another, who shifted accounting procedures in advance of an audit, is Arman, the New York sculptor. "We used to treat these assistants as independent contractors, but then we saw the writing on the wall," said Arman's accountant, Kenneth Goldglit, "and we changed them to employees."

While some artists prefer not to pay taxes for their assistants by calling them independent contractors, their assistants may have a legal basis to be considered joint authors of the artists' work if they were involved directly with the finished pieces, a right that employees do not have. That joint authorship would be dependent upon the degree to which the assistant could prove that his or her original ideas and decision-making is part of the final work, according to Joshua Kaufman, a Washington, D.C. lawyer who often represents artists. "Employees, on the other hand, have no claims to copyright ownership," he said. "Artists would rather their assistants be independent contractors for tax purposes, but prefer them to be employees for the purposes of retaining copyright," he said.

There have been a number of lawsuits brought by former assistants against the artists for whom they worked for joint copyright ownership of works, but they have all been settled out of court. Proving that one has made a significant contribution to another artist's work is not a simple process "as it is usually only the artist and the assistant who knows who did what, and ego gets in the way," Kaufman said. "If I say to an assistant, 'finish the sky in my painting,' that person might be able to make a good case for being a joint author, but if say, 'do this area here just as I blocked it out,' joint authorship becomes more difficult to establish.

Kaufman, who in 1989 successfully argued before the United States Supreme Court the right of sculptor James Earl Reid to claim copyright ownership of a work that a nonprofit group had commissioned him to create, noted that employers should require assistants whom they hire as independent contractors to waive all claims to copyright for all works created during the period of their relationship.

It is not uncommon for certain artists to have a large number of assistants in their employ. The complexity of the process involved in sculpture and printmaking, for example, often requires artists to hire others to perform certain technical tasks, from creating maquettes and inking printing plates to ordering materials supervising foundry work. Other artists' assistants may work in bookkeeping, clerical or marketing positions, and often the tasks demanded depend upon what is needed to be done on a particular day. Artists with very high volume sales sometimes seem like the presidents of small companies, with office managers and department heads overseeing a variety of activities. Peter Max, for instance, has separate retail and wholesale marketing staffs as well as two publicists, a receptionist and assistants performing various other functions, adding up to more than 35 employees. Many of these employees have voice-mail. Robert Rauschenberg employs more than a dozen people in his studios in New York City and Captiva Island, Florida. Dale Chihuly has between 15 and 20 employees, among them a comptroller, several bookkeepers, publicists, sales staff and others who assist this partially blind artist create his work.

The IRS developed a list of 20 criteria for establishing whether or not someone is actually an independent contractor or an employee. An independent contractor, for instance, may be defined as someone who determines his or her own hours, hires his or her own assistants, decides how a particular job is to be performed and supplies all materials necessary to complete the work. On the other hand, an employee is under the control and direction of the employer, given specific instructions on how the work is to be done, with set wages and fixed hours at the employer's work site. There are also a dozen or so criteria, many of them virtually the same, for determining who is an independent contractor and who an employee in questions of copyright ownership.

The rules for deciding whether or not an assistant is an actual employee are clear, Kenneth Goldglit said, "and the amount of taxes an artist will have to pay are really not all that significant. These are normal costs of any business. If the artist earns enough to hire an assistant, he's making enough to pay the taxes on that person. And, if the artist can produce more works because of the assistant's help, then he'll have more to sell and make more money."