While digging through my old e-mail recently, I came upon this snippy exchange between management and musicians regarding compensation for cartage. This is the sort of thing that really makes my blood boil–cartage is compensation paid to musicians who must load a lot of gear in and out of a venue. The philosophy behind this compensation is that it reimburses those who must come early, load in multiple trips of gear, and therefore need to drive to all jobs in large vehicles without possibility of taking public transit or carpooling.
Though it may seem like paying cartage reimbursement is a no-brainer for management, I can’t tell you how many times I’ve been shorted this compensation while working on jobs, even when there is a policy in place under a contract negotiated with the American Federation of Musicians.
Those of us who receive cartage payment often get the evil eye from our colleagues (who mistakenly think that we’re getting more money per service when we’re only being compensated for having to drive solo in a car full of gear and arrive an hour early to load in). In many groups I work with, this reimbursement is viewed by management as a perk and looked at with dubiousness. It is therefore frequently on the chopping block when renegotiating contracts.
This is a segment of an e-mail exchange. After this exchange, those of us in this group began to be taxed on our reimbursement. This is not a normal occurrence in most groups I work with (mileage and cartage are generally viewed as reimbursement and are therefore not subjected to withholding by the employer–though we musicians have to report this money as income to the IRS), and a huge uproar broke out around this issue in this ensemble.
Though we cartage recipients were outraged, there are a lot more of them (the non-cartage recipients) than there are of us, and we often find ourselves alone in this battle, with management viewing us as an expensive annoyance and our colleagues viewing us as being awarded extra pay for doing the same job.
Is Cartage Compensation or Reimbursement?
After chatting with my more tax law-aware musician colleagues, I have been made aware that there are benefits to having taxes withheld on cartage, since this money must then be reported as self-employment income and is subjected to higher taxes as a result.
What do you think? Is cartage income or is it extra compensation?
Regardless of the above answer, you can see how hot under the collar musicians get when the subject is even broached. Here’s a bit of the exchange I dug up in my e-mail archive. I changed all the names of involved parties:
I am John Doe, the accountant for the Anonymous Center, and also the Random Symphony Orchestra. I am also familiar with some of your names having done the accounting for the No Name Chamber Orchestra for many years also . Please allow me to explain the change in handling cartage.
This has been a topic under discussion for many years now. We have been advising the Random Symphony about this situation off and on, but we decided it was time to take action now to protect the organization.
Basically, any payment made to an individual for which receipts are not turned into the organization has to be considered taxable income. This is also true of per diem money paid out. With the No Name Chamber Orchestra, this money also appeared on your year-end 1099s. Any per diems or drayage (as they call it), were also considered income, and it was filed with the government accordingly. You did indeed pay taxes on this income. Because the Random Symphony Orchestra correctly pays musician’s fees through payroll, the per diems and cartage should also be paid through payroll. An individual can not receive a W-2 and a 1099 from the same organization.
If musicians were to fill out expense reports for their personal expenses relating to business and submit them directly to the Random Symphony Orchestra for reimbursement, then it would not be considered income. Since the organization has no way of knowing whether or not any cartage money is actually spent or to what extent it is spent, we have to consider the entire amount taxable income. If you do have receipts, you can claim those business expenses on your year-end taxes to offset the income. The Random Symphony Orchestra does not handle expense reports for musicians.
As an hypothetical example, let’s look at per diems. An organization may give employees a $50 per diem for an out of town trip. Some people may indeed spend all or part of it, but others will save the money. Without knowing who spent what amount, i.e. without receipts turned in to verify that indeed the entire $50 was spent, we have to acknowledge the entire amount as income.
This is not an issue of mistrust or misuse. We wholeheartedly respect your professionalism, your integrity and your talents. This new policy is simply protecting the Random Symphony Orchestra from any government scrutiny as far as money paid to an individual.
I hope this explains the situation a little better. If anyone has any further questions, please call Frank Doe. If he can not help you, you may call me at the number below. I fully understand your concern, but please know, this is something that needs to be done to keep things in check. I appreciate you asking the question. I hope I have given you a satisfactory response.
Service Accounting Manager
The e-mail outcry was instantaneous. This one (from a percussionist) sums up my thoughts on the issue quite nicely:
Dear Bill Doe:
I don’t get it. As far as I see it, cartage payment is indeed reimbursement: reimbursement for expenses involved in moving large heavy equipment. Some musicians have these expenses, and some don’t. Those that do have these expenses are reimbursed for those expenses. On the other hand, all musicians receive compensation for playing their instruments. What am I missing?
These outcries fell on indifferent ears. Our personnel manager e-mailed us with this message soon after the original one from Bill Doe:
I wanted to let you know that there is a new policy in place for cartage payment starting the beginning of 2006. Our accountants at Anonymous Center Accounting are going to be including your cartage in your payroll. This issue on how cartage has been paid in the past has been going back and forth for some time now. It has been determined by them that it is a form of compensation. The rule states:
“Anything that is paid to an employee that is not a reimbursement is considered compensation.”
So, in this check and in the future you will see cartage included as earnings.
Any questions please feel free to talk to me about it, although I might have to go back to the accountants, as I am not an expert on this subject.
Notice that “Frank Doe” refers to cartage as compensation Is this accurate?
Many heated e-mail exchanges followed from both musicians and management, yet the policy remained in place until I quit this ensemble, and it probably still is in place.
One more thing–no musicians in this ensemble receive any mileage compensation either, even though tout-of-town talent makes up a significant percentage of the ensemble. Lovely huh? I quit soon after.
What do you think of cartage payments (especially those of you who don’t receive them)? Are they reimbursement or extra compensation (you know what I think)? Was the management reasonable in this exchange? Do we deserve cartage at all?
Welcome to the world of freelance orchestral playing!