During a routine tax audit two years ago, Tractor Tavern owner Dan Cowan was hit with a retroactive $220,000 bill from the state's Department of Revenue (DOR) for having a dance floor in his bar. The DOR, which audited several bars in Seattle in 2011 and collected upwards of $300,000, says it has enforced the tax since the 1970s. But longstanding members of the Seattle Nightlife and Music Association (SNMA) say otherwise.
"I've never dealt with it in my life," says Cowan, who managed to get the crippling amount down to $91,000 on appeal. "I'm taking it from my retirement."
A bill introduced in the state senate's Ways and Means Committee last week would prevent nightclubs and bars with dance floors from being slapped with the 9.5 percent tax on ticket sales and cover charges for most live music events. SB 5613, introduced by Senator Ed Murray (D-Seattle), would clarify that the sales tax, which broadly applies to activities like skiing, bowling, and golf, should not be applied to venues that charge covers for "the opportunity to dance."
The bill has only four sponsors and hasn't yet been scheduled for a hearing, which doesn't speak to wide support. And while Republicans usually hate to pass up a tax cut, it could still be viewed as a free pass for Seattle clubs.
That said, Jazzercise businesses successfully lobbied for an exemption several years ago, and the SNMA is teaming up with the Recording Academy and the Washington State Arts Alliance to lobby legislators this year. "I've met with the stakeholders and ask they build a network of businesses outside of Seattle to tell their stories to their legislators," says Murray. "That is the only way it will pass." Local music promoter Dave Meinert thinks he can find support from unlikely allies. "The DOR wants to tax line dancing," he says. "I think we'll get the bipartisan support we need to pass this."