Seattlest Scholar: What Is the Deal With the "Dance Tax"?

Stirring up a recent shitstorm is the recent enforcement of a 1993 tax on admission with an "opportunity to dance." Anonymous bars, clubs and venues told The Stranger that the State Department of Revenue has started hitting them up for back taxes they've never had to pay before -- up to $210,000. The businesses, and the City Department of Film and Music, say they have never seen the tax enforced on music venues before. The Department of Revenue says this has always been a thing, and they have always let new bars know that this is a thing. This leaves bars, clubs and nightlife patrons wondering: what is this tax, what does it apply to, and why has it only recently been enforced?

First, it's important to understand what this tax is. At first glance, it seems a little like Footloose -- WHY CAN'T THE KIDS JUST DANCE?

Footloose (Theatrical Trailer)

The reality is, there's no huge stamp on this law about taxing the shit out of your favorite clubs and dance venues -- the law in question, as opposed to imposing a new law specifically for venues, attempts to define admission to certain activities as retail sales -- therefore making admission subject to Business and Occupation Retail Sales Tax. "Opportunity to dance" is one of these activities.

But here, without "dance tax" sashaying across the Washington Administrative Code, lies the problem: the law is vague. Super-vague:

The retail sales tax must be collected upon charges for admissions, the use of facilities, equipment, and exercise classes by all persons engaged in the amusement, recreation, and physical fitness services that are defined to be retail sales in subsection (2)(m) of this section. The retail sales tax must also be collected upon sales of food, drinks and other merchandise by persons engaging in such businesses.

If you thought that sounded like it refers to jazzercise or step aerobics, you'd be right -- The Stranger piece that broke this news reports that it's exactly what the law is intended for. Usually when you go dancing, in the nightlife sense, the facilities and equipment used are (a) the floor and (b) the bar or maybe (c) a chair? But I would hardly consider those dance equipment, as I use those when I'm just out drinking. But hey, let's go ahead and look at how the WAC defines "amusement and recreation" (emphasis mine):

"Amusement and recreation services" include, but are not limited to: Golf, pool, billiards, skating, bowling, swimming, bungee jumping, ski lifts and tows, basketball, racquet ball, handball, squash, tennis, and all batting cages. "Amusement and recreation services" also include the provision of related facilities such as basketball courts, tennis courts, handball courts, swimming pools, and charges made for providing the opportunity to dance. The term "amusement and recreation services" does not include instructional lessons to learn a particular activity such as tennis lessons, swimming lessons, or archery lessons.

That'll be the day, when our local watering holes start offering archery lessons. But for now, what we derive from this is that a dance night will be exempt for at least the four minutes where Cali Swag District is playing:

"Opportunity to dance" itself is pretty vague. When asked, the Department of Revenue spokesman Mike Gowrylow (who has been very busy the past few days, apparently) directed the PI to this informational page, a resource guide for bars created by the DOR:

A cover charge is generally a fee charged to allow guests entry for a specific event or activity. A cover charge that entitles guests to an opportunity to dance or to participate in a contest, such as karaoke, is subject to retail sales tax and the Retailing classification of the B&O tax. Sales tax may be included in the amount charged as a cover charge if it is properly posted that tax is included. See the Service and Other Activities section for times when cover charges are not subject to Retailing B&O tax and Retail Sales Tax.

Gowrylow says that this paragraph -- in a resource guide, not on the books -- clarifies that the tax does not apply to concerts or sports games, even though there are plenty of "opportunities to dance." But this paragraph, even if it were law, remains vague. In fact, the "Service and Other Activities" section on cover charges does nothing to alleviate this:

A cover charge is generally a fee charged to allow guests entry for a specific event or activity. In general, if the cover charge is for the privilege of listening to music or watching a pay-per-view show the income is subject to the Service and Other Activities B&O Tax. See the Retailing/Retail Sales Tax section for times when cover charges are subject to those taxes.

Thanks, Department of Revenue!

The problem with vague laws, as we've all experienced with things like noise ordinances with no decibel limit or definition of where noise needs to be reaching to be in violation, is it leaves the law open to arbitrary or selective enforcement. Really, that is what's at issue here: whether the law has been properly clarified for business owners, whether it's been enforced for this kind of thing before, and ultimately, whether it's fair that venues are being hit up for that money now. It's hard to look at specific cases, since those businesses are staying anonymous, but we'll keep you posted as this story develops.