The story behind the state’s so-called “dance tax” isn’t new. The conversation started in earnest in 2011, when The Stranger broke news about Seattle nightclubs being audited—and slammed—with hundreds of thousands of dollars in back taxes, a crippling sum assessed on venues where there was an “opportunity to dance.”
Isn’t that opportunity…everywhere? Footloose taught us as much. In addition to Ballard’s Tractor Tavern and Capitol Hill’s Century Ballroom—both hit initially with $250,000 bills—would the Department of Revenue also fine a high school dance? A concert at the Paramount? A benefit ball for a local nonprofit?
It begged a lot of questions—many of which are still being answered today. The dance tax is back in the news as deadlines to pay up draw near. Century Ballroom is holding tax-relief fundraisers and Oddfellows Cafe will donate 5 percent of its sales on March 11 to the adjoining dance hall. Meanwhile, a Senate bill to eliminate the dance tax is currently on its way through the state legislature—and a “dance in” is in the works as a tool of persuasion.
So…how did we get here, to the point of emergency fundraisers and dance-ins? Wouldn’t you know it: It started with jazzercise.
What, exactly, is an “opportunity to dance” tax?
In the mid-’90s a decades-old rule (WAC 458-20-183 for the wonks among us) regarding retail sales tax on "amusement and recreation" services was amended to include certain "physical fitness services." The state, which already taxed a wide range of activities (among them archery, badminton, bowling, golf, minigolf, and cover charges for, simply stated, dancing), revised the rule to clarify that sales tax was on “charges made for providing the opportunity to dance.” In 1993, that meant a whole lot of aerobics and jazzercise studios.
The sales tax didn't apply to “facilities where a person is merely a spectator, such as movies, concerts, sporting events, and the like; the sale of or charge made for instructional lessons, or league fees and/or entry fees”; and something about carnival rides. Nightclubs are not specifically mentioned—but if the venue had a dance floor, charged for entry, and was primarily about dancing, the sales tax applied.
If this tax is decades old, why are we talking about it now?
The DOR started cracking down on this tax collection two years ago—and according to some Seattle clubs and the Seattle Office of Film and Music, the law has been reinterpreted outright. “This is the first time, in my experience, that they’ve applied this tax to music venues,” Film and Music director James Keblas told The Stranger.
The tax “was moved from under sports and recreation to nightclub life just a few years ago, after our business had been open and running,” Century Ballroom owner Hallie Kuperman told us last week. “It’s a little misleading on their part to even say you should know. Everybody’s been paying their taxes—it’s not like we’re tax evading.”
Department of Revenue spokesman Mike Gowrylow begs to differ. The tax is a known entity, he told us, acknowledging that eight of 13 Seattle venues audited were complying with the dance tax. “It’s the obligation of the business to learn and comply with our tax law,” he said. “If you’re not sure, ask us.”
Does my favorite club owe back taxes?
Neighbours, Tractor Tavern, and Century Ballroom all owe the state. Both the Tractor and Century Ballroom have negotiated with the DOR to reach a price that won’t shut the clubs for good. Each now owes $91,000 or $92,000, respectively. Tractor owner Dan Cowan told The Seattle Times that the tax “pretty much wiped out my retirement.” And Century is in the middle of a fundraising effort: As of March 1, they’ve raised over $51,000 with roughly two months to go. “I will pay it. I will figure that out,” Kuperman told us. But she’s also had to alter programming and adjust prices while negotiating with the DOR.
Would, say, KeyArena, have to charge this “dance tax”? It could, if it hosts a dance-specific event, but it likely won’t for concerts.
What about Showbox or the Paramount? Same deal.
But I dance at those venues… So do we.
That’s weird. Yup. DOR spokesman Mike Gowrylow explains: “If you go to a Mariners game, during the seventh-inning stretch, people dance around. Well, you know, you wouldn’t be going to a Mariners game if there wasn’t a game. The fact that you’re dancing is incidental. But if you go to a dance club, where people are dancing and you expect to dance—well, it’s a dance club. You’re paying for the opportunity to listen to music, yes, whether it’s live or recorded, but also get out there and dance. If you’re giving people the opportunity to dance, you should be collecting the tax.
It’s not the same thing if you go to, say, a Grateful Dead concert and people are dancing up in the front; that’s incidental. You’re really coming there to watch a Grateful Dead concert. Some people probably want to dance but you’re promoting a concert: a passive, sit-down, listen-to concert. In 95 percent of the cases it’s common sense.”
If you say so. Will I have to pay more at these clubs?
Kuperman said that if SB 5613 doesn’t pass, she’ll have to raise ticket prices and cover charges at Century Ballroom. Neumos has promised a 10 percent hike on ticket prices as well.
What’s SB 5613?
It’s state Sen. Ed Murray’s (D-43, Capitol Hill) bill to eliminate the dance tax—technically, “providing that certain cover charges for the opportunity to dance are not considered retail sales.” Senators Jeanne Kohl-Welles (D-36, Ballard), Joe Fain (R-47, Covington), and Karen Keiser (D-33) have also signed on.
Will it pass?
The Senate Ways and Means committee moved it along to the Rules committee on Friday, and as of yesterday, it passed the first two steps in the Rules committee. Since the tax collection affects the budget, there’s a good chance it could make it to the Senate floor for debate.
What can I do?
Go to https://www.votervoice.net/WAARTS/Campaigns/30865/Respond to weigh in.
And maybe rewatch Footloose.