from the tax-tax-revolution dept
Dancing, what could be more controversial? Whether it's arresting NYC subway travelers for doing the charleston, or body slamming anyone dancing silently at a memorial to freedom, there appears to be something our government dislikes about musically-induced gyrations. With that in mind, it's with a total lack of surprise that I report that the state of Washington is attempting to make up the tax revenue they forgave Microsoft by finding any clubs in Seattle that offer patrons an "opportunity to dance" and taxing the testicles off of them. It all began, apparently, when state lawmakers revised their software royalty tax because of Microsoft.
In April 2010, Washington State’s Legislature changed the definition of its software royalty tax and effectively granted amnesty to Microsoft, helping the company lock up $1.51 billion in savings from its thirteen-year Nevada tax dodge - and more than $100 million annually each year into the future.Well, it wouldn't do for the state to simply have less tax revenue, so to make that amount up they decided to shake down Seattle clubs with a relatively ancient tax on "opportunities to dance" and demanding back taxes from tons of clubs. Just to throw out some numbers, we're talking about tens and even hundreds of thousands of dollars owed per club. Moreover, this tax was actually never intended to be applied to night clubs, ballrooms, or bars. It was originally meant for clubs that partook in some ancient ritual called "jazzercise". Now it's being selectively reinterpreted to tax these clubs, even if their patrons don't dance at all.
It works like this: If the state believes that you give your patrons the opportunity to dance, then you pay the tax even when people don’t dance. That’s according to Mike Gowrylow, with the Department of Revenue. Gowrylow: “You could have somebody go into a nightclub, or a bar, or tavern, and they pay cover charges. Unless you followed every person around, you wouldn’t know if they actually danced or not, so the only simple way we could have of defining this is if you give them the opportunity to dance, then the tax applies.”This has led to a sadly hysterical practice by club owners that involves strategically placing club furniture throughout their floors as a sort of obstacle course to prevent dancing. No, seriously, that is actually happening.
That said, while government could win championships in evil, they're not real big on doing actual work, so you'd imagine it would be quite difficult for Department of Revenue employees to go to different clubs and bars to see if the obstacle courses are obstacle-y enough to warrant no taxation. As it turns out, they don't even bother. Instead, they just troll the internet to see if anyone mentions any dancing at these places. Seriously.
Gowrylow says auditors search the Internet to find out whether people dance at specific clubs. One clubowner reports an auditor told him: “You have the opportunity to dance, and we verified it by 8 or 10 different references on Yelp.”Think it can't get any stupider? Wrong. One club offers this.
“My auditor… came in with an obituary of a girl who committed suicide,” says another club owner. “When I argued that we aren’t primarily a dance club—we have ‘No Dancing’ signs up everywhere—she flashed this obit that said the girl liked to dance at [our club]. The auditor said, ‘I know this is ridiculous, but I have to do this.’”Yay, bureaucracy. To pay these thousands-of-dollars fines, many of the clubs in Seattle are asking for donations, noting that, if something in the assessments doesn't change, their businesses may not survive. I know a decent-sized software company that should probably be donating right about now.