by Chason Gordon
– The Capitol Hill Times –
When people first heard about the dance tax, it sounded like a prohibition-era law that somehow stayed on the books over the years. The tax, however, is a serious threat to the survival of several local nightclubs, many of which are in no position to pay it.
The source of the trepidation is a 50-year-old law that leverages a 9.5 percent sales tax on “amusement, recreation, and physical fitness,” later defining amusement and recreation as “charges made for providing the opportunity to dance.” The original tax was upheld by a Thurston County Superior Court judge in 1971, though the words “opportunity to dance” were not added until 1993, as a means of collecting taxes on the temporarily booming aerobic and jazzercise industry.
After the Department of Revenue (DOR) conducted a mass audit in 2009, they discovered that several nightclubs weren’t complying with the law, and leveraged large retroactive tax bills. The non-compliance was news to many of the clubs. Century Ballroom and Tractor Tavern found themselves hit with $250,000 bills, but managed to negotiate the amount down to the range of $90,000.
In the midst of the bills, there is a great deal of confusion on the part of club owners regarding the wording of the tax, and what it applies to. The focus is on the “opportunity” part of the “opportunity to dance,” since concerts (along with plays and movies) are exempt from the tax. According to DOR spokesman Mike Gowrylow, this means that music festivals and venues that cater to live bands would be exempt, because, though dancing may occur, it is not the emphasis and has not been promoted as such (concerts are considered spectator experiences). If, however, there is a dance floor, or the event is promoted as an opportunity to dance, than the tax can be assessed. Many music venues feature live music and function as dance clubs, which adds a grey area to the previous distinctions.
“The opportunity to dance tax is so nebulous in the first place,” said Hallie Kuperman, owner of Century Ballroom, “that I’m not exactly sure why they didn’t say, ‘we should just tax dancing.’”
Kuperman’s argument against the tax is twofold. From a business standpoint, she noted that the tax is not being enforced across the board with all venues similar to hers, especially with larger events, like Bumbershoot, the Gorge and the Capitol Hill Block Party. “There’s an opportunity to dance at all those venues because there’s music and a floor,” she said. She added that many of the major night clubs in Seattle did not know about the tax, “and the fact that somebody would think that $92,000 would not actually jeopardize a business is shocking to me.”
Even if there were consistent enforcement, however, Kuperman worries about the effects on nightclub life in Seattle.
“This city has a vibrant nightclub life that is based on relatively inexpensive ways in which you can go participate in the world out there,” said Kuperman. “My business is based on paying little, because my goal is to create a community of people across the world who do their thing,” she said. “It’s good for your heart and soul. You see that through testimonies of everybody who has been writing in; they’ve talked about how the community and dance have changed their lives.”
Since many of clubs do not have the cash flow to handle the exorbitant taxes, they are mounting a legal effort to block them. A bill (5613) sponsored by Senator Ed Murray seeks to amend the law and remove “opportunity to dance” as a tax liability. It currently has the support of Washington State Arts Alliance, Washington Restaurant Association, The Recording Academy, Seattle Theater Group and Local 76-493 Musician’s Association of Seattle, as well as several venues across the state, including Century Ballroom and Tractor Tavern. The next step is getting supporters to contact the various legislators in their district on the Ways and Means Committee, so that the bill can ultimately reach an executive session.
In the meantime, Kuperman has been “amazed” at the support from the dance community, “from people who dance, to people who don’t dance, to people who don’t understand how there could be such a law.” Since appealing to the public two weeks ago, Century Ballroom has raised just over $30,000 from checks and online contributions, as well as from their recent 16th anniversary celebration. They have about seven weeks to pay the total amount.
Kuperman is currently focused on creating momentum behind SB 5613, and hopes to reach people outside the dance community.
“How do we reach further? We need to reach people to say, ‘This affects your community too, because if you go out to listen to music and if you believe in dance…it’s going to affect all of us.’”