Wash. Dance Tax Examined

A dance tax that’s been a bone of contention in Washington state for years is being reviewed for possible repeal by lawmakers.

The law, which falls under the state’s Business and Occupation Retail Sales Tax code, imposes a tax on taverns and clubs that include cover charges and offer guests “an opportunity to dance.”

It also says that the tax must be collected by businesses that charge admission, play music and offer a lengthy list of other sporty activities.

But if it sounds like a safe bet to assume the code would cover concerts and sporting events where the urge might strike to dance, think again.

Though a resource guide about the code notes that “in general, if the cover charge is for the privilege of listening to music … the income is subject to” the tax, the Department of Revenue has previously said the code doesn’t apply to concerts, which count as “entertainment.”

That’s left bar and club owners who’ve been slapped with big taxes fuming, as they consider enforcement of the code to be arbitrary and specifically targeting smaller venues.

The Department of Revenue noted in a statement that only “a handful of businesses that failed to collect sales tax on cover charges they imposed on customers to enter dance venues” have protested.

“Most of their competitors were properly collecting sales tax when due, and if businesses weren’t sure whether or not they should collect the tax in a given situation, all they had to do was ask. They didn’t,” the statement said.

The tax repeal has already cleared a committee and is awaiting a vote in the state senate.