Expert: Dan Pepper - 11/12/2010

Question
Hi Dan,
I've actually been selling adult DVDs and downloadable clips for a few years. They are tickling fetish videos and contain some light bondage and on rare occasions a sex/penetration scene. However, my situation is a little odd. I don't film my own videos. I'm never in the videos. I don't even meet the models as they usually live in other states and even other countries. I e-mail models who offer custom videos through their websites and pay them to make a video for me. They make the video and send me a copy of their driver's license or passport for 2257 (although, am I required to have that as I'm not the one filming? I have always gotten them just in case) and a model release form, allowing me the right to sell the video. Sometimes they retain the right to do the same. Am I a producer even though I don't film anything or have a studio or contact with the models beyond e-mail? Do I need to send 1099 forms to these models. I have been reporting the videos as inventory purchased as I don't know what else to call it.
I thought I understood how this worked, but coming across your site has made me want to look closer.
thanks
Joe

Answer
Hi Joe,

If you are asking whether you are a producer for 18 USC 2257 purposes, then the answer is yes, you would be a secondary producer, and are subject to the labeling and record keeping obligations.

The regulations define a secondary producer as:

"any person who produces, assembles, manufactures, publishes, duplicates, reproduces, or reissues a book, magazine, periodical, film, videotape, or digitally- or computer-manipulated image, picture, or other matter intended for commercial distribution that contains a visual depiction of an actual human being engaged in actual or simulated sexually explicit conduct, or who inserts on a computer site or service a digital image of, or otherwise manages the sexually explicit content of a computer site or service that contains a visual depiction of, an actual human being engaged in actual or simulated sexually explicit conduct, including any person who enters into a contract, agreement, or conspiracy to do any of the foregoing."

I cannot comment on the tax treatment of your payments to the models, but in general, if you pay the model in the U.S. more than $600 a year, you need to issue them a 1099.