The Art of the Lien: Another Way for Artists to get paid
If an artist improves a piece of personal property (like a sculpture, painting, jewelry) and they are not paid and they are in actual possession of the property, they can take an artisan lien on the property. For those that don’t know, a lien is a legal claim against a property. All jurisdictions recognize in some form of another recognize a possessor or artisanal lien. This is an artisan’s legal right to be paid for improvements they made to personal property.
Most jurisdictions (like Washington DC) codify artisanal liens. Generally, the artisan is allowed to retain personal property they improved until they receive full payment for a period of time after they give notice to owner of the property. § 40–307.02 of the DC code explains that an artisan is permitted to sell a piece of personal property of someone else at public auction that they improved if they were not paid what was agreed would be the cost of their services and:
1) They are still in actual possession of the property
2) They were not paid within a month of when the payment was due.
3) After giving notice once a week for 3 successive weeks in some daily newspaper published in the District.
5) The property is valued at $50 or less.
The proceeds from the same are used to pay the debt, the cost of the sale, and the remainder must return to the owner.
If the value of the personal property is greater than $50, the artisan can file a law suit and have a court force a sale under § 40–307.03 of the DC Code.
Why might an artist pursue an artisan lien as opposed to just suing for breach of contract? Retaining possession of the personal property allows artists to retain leverage and encourages property owners to pay. If you are an artist that has worked on someone else’s personal property and you were not paid, consult a licensed lawyer in your local jurisdiction before you hold on to someone else’s personal property.
Don’t Fret: You (Generally) have a right to Busk
For those that don’t know, busking is the act of musical performance and the acceptance of voluntary donations. People have been doing it for centuries. The Courts in the United States have a long history of examining restrictions on busking from local municipalities. The Courts have generally scrutinized restrictions on busking carefully as they implicate the 1st amendment. Just last year, a district court in California partially denied a motion to dismiss a dispute over a vending ordinance & expressive activity ordinance reasoning that busking was an expressive activity protected by the first amendment . Dorsett v. City of San Diego, No. 24-cv-00813-AJB-AHG, 2025 WL (S.D. Cal. Feb. 24, 2025).
Since there is no landmark Supreme Court case or federal law on busking, different jurisdictions are divided on how much busking can be regulated. Generally, busking is subject to reasonable time, place, and manner restrictions. For example, restrictions on blocking the street, entries or exits of buildings, or preventing people from walking will likely be upheld. Some cities have limits on decibel levels or power level of amplifiers. Some cities (like Washington D.C.) require a permit if you want to busk in public parks or on public transpiration. Generally if a city requires a permit in a specific area to perform, it should be nominal and the process to obtain it should be relatively simple.
What should you do if you would like to be a busker? It is best to research the local laws before you begin. It is likely the city that you want to work in will have a website which will explain the rules to you. Most communities want you to know what the rules are, so you can follow them. If you feel like they are too onerous, you should consult a licensed attorney in that jurisdiction to help you understand if you might have proper challenge. You might not even have to get a ticket or get arrested to make the challenge. In Barilla v. City of Houston, No. 20-20535 (5th Cir. 2021), the 5th circuit reversed a dismissal of a Busker’s challenge to a local ordinance even though he was never arrested or issued a citation.
More Mistakes Artists and Small Businesses Make at Small Claims Court
Even though small claims court handles small claims pressing your claim can be a large challenge. Here are a few mistakes artists and small businesses make which an experienced attorney like Rich and can help you avoid.
Putting too much trust in certified mailing service executed by the Court
Just because a plaintiff paid the Court to serve the Defendant doesn’t mean they were actually served properly. Defendants (including businesses) often refuse to sign for certified mail. If this happens, service is incomplete and a plaintiff must serve them again. It is important to check with the Court to see if they actually received the signature card for mailing the complaint via certified mail. If they didn’t, they must be served again.
Not serving the Defendant within the required time frame
Each jurisdiction has certain limited time period for when a defendant can be served. It is possible to only find out that a first attempt at service was a failure after the time period to serve the defendant has elapsed. In DC small claims court, a defendant needs to be served within 60 days from when a complaint has been filed. What should a plaintiff do if the time period to serve the defendant has elapsed? The plaintiff needs to request an alias summons which will reset the time period to serve the defendant.
Not being able to determine if the defendant is in the military
If a plaintiff is awarded a default judgment, they are required to file a service member affidavit. The service member affidavit is a sworn statement which generally explains either whether or not the defendant is active duty military and how the plaintiff knows this. The reason why these are required is because of the Service Members Civil Relief Act which is intended to prevent default judgments from being taken against active duty military members.
The Department of War runs a website which allows peoples military status to be checked if a plaintiff has their last name, social security number or birthday. If a plaintiff has neither of those things, there are third party services which can lookup someone’s military status with less information but will charge a fee. A plaintiff can also swear to a defendant’s military status based on their own personal knowledge. If plaintiff has spoken to the defendant (or anyone with knowledge) personally about what their job is, that could be sufficient.
When should a business be a hobby?
The federal tax benefits for running business are large and well known. Businesses are allowed deductions on federal income taxes for ordinary and necessary expenses, owners of businesses are allowed qualified business interest deductions, businesses are allowed bonus depreciation, section 179 deductions for certain property put into service, and so on. Given the many benefits available to running a business, it might surprise you to learn that many people have taken the position with the IRS that their activity was not a business but a hobby. See Batok v. Commissioner, T.C. Memo. 1992-727 and Spiegelman v. Commissioner, 102 T.C. 394 (1994). In those cases, the taxpayer argued the activity was not carried with continuity or regularity. Id.
To be clear, there are more factors which courts and the IRS consider whether an activity can be considered a business or a hobby. Recently, the U.S. Tax Court issued a decision in Young v. Commissioner, which went over what the IRS considers when characterizing an activity as a hobby or a business. See Young v. Comm’r, T.C. Memo. 2025-95.
In Young, the court explained one of the inquiries used to determine if an activity is a hobby or a business is if the activity was engaged with the intent to make a profit. Id. at 25. The intent to make profit must be in good faith but need not be reasonable. Id. To be clear, an activity does not actually have to make a profit. It just must be carried on with the intention of making one. Citing Treas. Reg. § 1.183-2(a) the court listed the nine non-exhaustive factors that are considered when determining whether an activity was intended to make a profit. Id. Those factors are:
(1) the manner in which the taxpayer carries on the activity; (2) the expertise of the taxpayer or the taxpayer's advisers; (3) the time and effort expended by the taxpayer in carrying on the activity; (4) the expectation that assets used in the activity may appreciate in value; (5) the success of the taxpayer in carrying on similar activities; (6) the taxpayer's history of income or loss with respect to the activity; (7) the amount of occasional profits, if any; (8) the financial status of the taxpayer; and (9) whether elements of personal pleasure or recreation are involved.
The likely reason why the taxpayers in the tax court cases which characterized their activity as a hobby as opposed to a business is to avoid self-employment tax. Income from hobbies is not subject to self-employment tax (federal income tax still applies to hobbies).
Another reason why a taxpayer might be alright with characterizing their activity as a hobby is if their expenses are the costs of goods sold. While it is true as general manner hobby expenses are not deductible on federal income taxes, costs of goods sold are subtracted from gross receipts in order to calculate gross income. Thus, if an activity’s only costs are costs of goods sold, losing out on the business expense deduction is minimal.
Another reason why a taxpayer might want to characterize their activity as a hobby is if they are receiving a benefit which is income dependent. For example, if you are under full retirement age social security benefits will be reduced if a tax payers earns wages above $24,480 if they reach retirement age after 2026 (it is $65,160 if they reach retirement age in 2026).
What does this mean for artists, musicians, and other aspiring entrepreneurs? It is important to check in with a tax expert as you start a new venture. There may be a basis to characterize it as a hobby and achieve a greater benefit than if it were characterized as a business.
3 Mistakes Artists and Small Business Owners Make at Small Claims Court
No one wants to go to small claims court. Unfortunately, sometimes it cannot be avoided. Here are three mistakes small business owners (including artists and musicians) make when taking their case to small claims.
Not hiring a lawyer when you actually need one
While it is always beneficial to have then advice of counsel, there are some situations where a person must hire a lawyer if they wish to recover money or defend themselves. Some jurisdictions (like Washington D.C. and Federal Courts) require retaining a lawyer if the dispute is between a person’s business entity (like an LLC or S-Corp) and another party.
2. Not serving the right person
In order to recover from a business entity (like an LLC or S-Corp), the business entity must be served properly. Each state requires the designation of an agent who is authorized to accept service on behalf of the entity. The address of the designated agent should be searchable on a state agency’s website. It is critical to serve the designated agent because anything short of that will not be sufficient for a case to proceed. Even if an entity has actual notice of a lawsuit, they still must be served properly.
3. Not planning on enforcing the judgment
Even if a person (or entity) wins at small claims court, a defendant is not required to pay the plaintiff on the spot. After winning a judgment, a person (or entity) must enforce it. This requires new court filings, serving the defendant again, and a new court date. This should be accounted for when considering a settlement. Is it worth taking less money in a settlement rather than wait to enforce a judgement in the future that a defendant might not be able to pay? It can be a difficult decision. Anything can happen. A defendant may have money at the moment, but none in the future for a variety of reasons. People need to understand how long the entire process takes before declining a settlement.