Obscure tax could force Capitol Hill club to close its doorson February 19, 2013 @ 6:23 am (Updated: 10:28 am - 2/19/13 )
Bars and clubs that collect a cover charge and have a dance floor or even a strip of carpet where you can dance are supposed to collect a 9 1/2 cent sales tax. Whether people dance or not, the clubs that provide a place where people could dance are supposed to pay the state a portion of that cover.
It's part of a decades-old tax law covering amusement, recreation and other entertainment.
Hallie Kuperman has owned the Century Ballroom for 16 years. She had never heard of the tax until the state audited her club two years ago and determined she owned nearly $250,000 in back taxes.
"You shouldn't be taxed for dancing for a lot of reasons," said Kuperman. "If you were going to tax dancing, why did you not tell me in the last 16 years that maybe I should be paying this tax?"
Mike Gowrylow is with the Department of Revenue. He said it's not up to the state to tell people to investigate the tax code when they open a business.
"If you choose to do business in our state, it's your obligation to learn, understand and comply with our tax laws," he said. "All this information is readily available. If you have any questions on whether taxes are due or not, you can call us."
Kuperman claimed that's what she did when she opened the ballroom, and the state never mentioned this tax. Other businesses hit for back taxes by the state have said the same thing.
"It's just unfair to say that as a group we chose not to pay the tax," Kuperman said. "That's just so not it."
Kuperman appealed the ruling and has been working with the state to get the tax bill cut down, and both sides have agreed on $92,000. She must come up with the cash in three months, or she'll likely have to close.
Gowrylow said the state doesn't want businesses to go out of business, but everyone has to pay their taxes.
"We just can't look the other way and say 'Gee it's too bad you didn't comply, do it going forward and everything will be fine,'" he said.
The Century Ballroom is holding a fundraiser Saturday night during its 16 year anniversary party to raise money to pay its back tax bill. So far it's raised about $7,000.
State Senator Ed Murray has sponsored a bill for the last two sessions that would eliminate the opportunity to dance tax. It didn't get a hearing last session.
It will have a hearing on Thursday.
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