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to Section One | to Arts & Entertainment
posted Friday, March 8, 2013 - Volume 41 Issue 10
Doin' the tax man twist - Century Ballroom fights 'dance tax' with community's help
Section One
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Doin' the tax man twist - Century Ballroom fights 'dance tax' with community's help

by Shaun Knittel - SGN Associate Editor

The other day, I got the opportunity to do a lot of things. None of those things were taxed. But, should you find yourself at a nightclub, just as many of us in the Seattle LGBT community often do, and the opportu

nity to dance presents itself, just know that the establishment that allows such a thing is being taxed because of it. Is it just me, or does this feel like a bad remake of Footloose?

If only it were a joke. And believe me, venue owners like Century Ballroom's Hallie Kuperman are not laughing. Century Ballroom's 'Sweet Sixteen' anniversary celebration was a bittersweet event - instead of celebrating a whopping 16 years as one of Seattle's premiere dance venues, Kuperman and company asked attendees to treat the night as a fundraiser, to help pay a large past-due 'dance tax.'

Kuperman, who is Lesbian, has turned to her social-dance customers and other members of the local community to help her raise $92,000. She maintains she did not know she was supposed to collect a sales tax on the cover charge at her dances.

It's pretty stupid, really. Imagine going to your favorite dance venue and instead of forking over the normal $5 or $10, you are asked for $11.35. Under state law, tickets or cover charges for movies, concerts, and plays are exempt from sales tax. But if a business offers customers 'the opportunity to dance,' the tax must be collected. No other state does this - it's not a common practice whatsoever. And let's just call it like it is - sad that this tax exists in the first place. Kuperman is not alone. Several Seattle nightclubs have also been hit with large bills after audits by the state Department of Revenue (DoR) revealed they weren't paying the tax either.

STATE: THERE'S NO EXCUSE
The owners of Century Ballroom and other dance venues should have been aware of the tax, Department of Revenue spokesman Mike Gowrylow said.

A Thurston County Superior Court judge upheld the tax in 1971. The DoR says they have repeatedly explained it in publications and on its website.

'It's the obligation of a business to learn, understand and comply with the tax laws,' Gowrylow told the Seattle Times. After routine audits in 2009 showed some businesses weren't complying with the law, DOR audited 44 Seattle-area nightspots that serve alcohol. Of the 13 that had cover charges, eight were correctly collecting tax and five weren't, Gowrylow said. Many of those venues are LGBT owned and operated on Capitol Hill.

MURRAY CUTS IN
State Sen. Ed Murray (D-Seattle) and three other senators have introduced a bill, SB 5613, that would exempt dance-related cover charges from the sales tax.

Murray said there is confusion over when a musical performance is considered a nontaxable concert and when it's a taxable 'opportunity to dance.'

Murray, recalling a concert-hall performance in which people danced in the aisles to the music of the Irish band The Chieftains, asked: 'Did that become an opportunity to dance, and should we go back and tax them? I just think it's a really arbitrary way to try to apply a tax.'

The bill passed out of the Senate Ways and Means Committee this week and is anticipated to make it through the Rules Committee and then onto the Senate floor for a full vote.

ARTS COMMUNITY RALLIES
Businesses that fall under the current law can include dance clubs, bars, concert venues, karaoke bars, comedy clubs, performing arts centers, nonprofit arts organizations, and more.

Washington State Arts Alliance Foundation has asked supporters to help end the 'opportunity to dance' tax. On the group's website, the Arts Alliance posted, 'Do you dance? Do you go out to see live music (from indie rock to country)? Do you appreciate dance? Do you want to live in a community that encourages, supports, and protects dance? If you run an organization that features live music [and] dancing, if you go out to concerts and clubs, if you dance while karaoke is happening, if you take or teach dance, if you are an arts advocate and support a strong, healthy, and vibrant community - then this matters to you!'

The foundation is asking for people statewide to call attention to the issue. In addition, they are asking that people contact their state senator and urge them to support the passage of SB 5613.

The Arts Alliance, Seattle Nightlife and Music Association, Musicians Local 76, The Recording Academy, Washington State Restaurant Association, Social Outreach Seattle, and many others support the passage of this legislation.

CENTURY STATES ITS CASE
The facts are not as they always seem, says Kuperman. 'In a nutshell, a few years ago the Department of Revenue identified a tax that had been implemented for aerobic studios and Jazzercise, and applied it to clubs. They quietly added language to the Taverns section of their website, but did not send out a communication to the business sector notifying us of the change, as is customary.'

The department then started targeting high-profile clubs and assessing penalties far beyond their ability to pay. In Century Ballroom's case the bill was around $250,000. The Tractor Tavern's assessment was similar. 'While the DoR has reduced the assessments, they still are high enough that our business's future is unclear. Our final bill from the state amounts to approximately $92,000,' said Kuperman on Century Ballroom's website.

It should be noted that when Century Ballroom's current bookkeeper started 10 years ago, she contacted department officials by phone, reviewed with them all the various things Century Ballroom does, and was assured they were paying everything appropriately. INCONSISTENT STANCE
Kuperman says the department is now refusing to stand behind information they provided verbally. 'The 'Opportunity to Dance' is not in any law,' she said. 'It is only the DoR's interpretation of the law in the Department's rules. It is also impossible to clearly define what dance is, let alone what the opportunity to do so is. The DoR itself has acknowledged this. Because there is no reason to believe the Department will change its rules on its own, we are seeking to amend the law to clarify its intention and remove 'opportunity to dance' as a tax liability. 'Setting aside that this is a sin tax on an activity that is wholesome and promotes community and healthfulness, the impact on businesses statewide, if not addressed, will have a chilling effect on our vibrant nightlife economy,' she said. Still, Kuperman has made a sizable dent in the money needed. As of Thursday, Century and its supporters had raised over half of the $92,000 tax bill.

To thank the public for caring and rallying to raise that kind of cash, Century Ballroom is throwing a 'We're Halfway There!' party on March 15, starting at 8:30 p.m. (21 or older). For more information visit www.centuryballroom.com/home/events/halfway-there-party.

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