US industry welcomes the introduction of the HITS Act

By Emmanuel Legrand

Senators Dianne Feinstein (D-Calif.) and Marsha Blackburn (R–Tenn.) have introduced in the US Senate the bipartisan Help Independent Tracks Succeed Act (HITS Act) to "amend the Internal Revenue Code of 1986 to provide for an election to expense certain qualified sound recording costs otherwise chargeable to capital account." Companion legislation was introduced in the House by Representatives Linda Sánchez (D-Calif.) and Ron Estes (R-Kan.).

  If passed as part of the current stimulus package discussed between the leaders of the Senate and the House of Representatives, the legislation would allow musicians, technicians and producers to deduct 100 percent of recording production expenses, up to $150,000, in the year they are incurred, rather than in later years. This provision would align these categories of creative workers with film, television and theater productions that are entitled to fully deduct production expenses in the year they are incurred.

Provide relief 

  “Our bill would provide relief by allowing independent musicians, technicians and producers to deduct their production expenses in the same year they occur, rather than forcing them to spread those deductions out over several years. This is in line with how expenses are treated for film, television and theater productions, and it makes sense to create parity for music productions,” said Senator Feinstein.

  The legislation has received broad support from the industry, from organisations such as independent labels trade body A2IM or the Recording Academy. Richard James Burgess, president and CEO of A2IM, called the HITS Act a "common-sense, bipartisan, fiscally responsible measure." 

Incentivise music production

  He added: "The tax incentives contained in the HITS Act are designed to get musicians back into the recording studio by treating the costs of making a sound recording the same as production costs for other creative content."

  Harvey Mason jr., Chair & Interim President/CEO of the Recording Academy, said the HITS Act "lays the groundwork for creators to produce new music and create jobs amidst a year filled with economic uncertainty" and will "incentivise more music production."