“We’ve had several meetings with the auditor since November, and at the last one he said a preliminary determination had been made that we were hobbyists, not artists, and therefore could not write off our expenses,” said Venus, a visual artist, songwriter, bandleader and performer. “This has been unbelievably demoralizing. He basically is saying that if we really knew what we were doing, we should have been more profitable by now, and should have known to give up.”
“They’re arguing that we’re not intending to make a profit on art, that we’re just pretending to be artists so we can indulge in our hobbies and go on vacations,” said Reini-Grandell, a poet and English professor at Normandale Community College who co-hosts KFAI-FM’S Write-On! Radio. “That’s why they don’t want us to be able to subtract any expenses from our profits. They want us to pay back, with penalties and interest, the refunds we’ve gotten previously. Also, they seem to have put a ton of time into our case. They must be thinking they will make a lot of money from this somehow.”
It's a semi-expected thing for revenue people to go after artists in a given city or region every so often, to keep them on the straight and narrow, and increasingly the IRS has been treating self-employed people as “hobbyists” if they don't turn a profit for 3 out of 5 years, and disallowing their operating expenses. But there appears to be something else at work here— it looks like these people are being singled out and punished for their politics. Or maybe, like police going after marijuana growers because it's easier than going after meth labs, they could just be doing it because it's easy money, since artists are poor and isolated, and are unlikely to have the resources or organization to put up much resistance.
“The tone of all these proceedings have been completely anti-art. There has been an emphasis on creating a product, advertising it for sale, and then selling it. …
Writers do not write a few lines and then advertise they have a poem for sale, making sure that the poem sells at a break-even point of what it cost monetarily to produce it. But this is what the Minnesota Department of Revenue insists I should be doing. It sickens me to have to participate in this because I know it is deeply wrong.”
Sometimes, these apparent miscarriages of justice loom large in the headlines and then kind of fall apart when you look at the detail. Not this one. The further you get into the taxman’s narrow view of capitalism – large record company: good. Independent entrepreneur: bad – the more apparent it is that he believes so implicitly in the winner-takes-all model of capitalism that it’s not enough for musicians in the long tail to bump along the bottom indefinitely. No, they must be shamed for failure and fined a six figure amount in back taxes.
It all seems to come down to intent. Does running your own independent record label and ‘failing’ to sign to a major mean you don’t want to make money? At the consistent but modest level of success Venus de Mars has, the majors aren’t interested and the musicians keep more of their profits if they run their own show. Does allowing your music to be played royalty-free on public radio mean you just don’t want success enough? (Tell that to the Ariana Huffington business model of ‘blog for me for free – you’ll get exposure’.) It’s a Kafka-esque nightmare where the artists must try to prove they are innocent of just not wanting it enough.
Excerpts from the interview with one of the artists after the break:
MP: Venus, you told me the other day that you’re obviously being made an example of. Why would that be? Why you, and what message is the State of Minnesota sending the rest of us if they nail you?
DeMars: I don’t have a clue, but I have theories. As our accountant told me the other day over the phone, "I don’t know who you pissed off over there, but …" Yeah. They’re throwing the book at us, and with assertions that make absolutely no sense in the music world. Things like the fact that I’d ‘allowed’ – their words – my music to be played on The Current as an example that I’m not interested in making a profit. The Current, they say, is part of Minnesota Public Radio, and MPR, they say, doesn’t pay royalties. A songwriter can only get royalties if they’re associated with a registered publisher, which I have been (with ASCAP) since 1996. I publish my own work so they can pay me. I am set up for being paid royalties. If I was really not interested in making any profit, why would I have done that?
They also really don’t like that I tour. They say I tour way too much and that really, my name is already out there enough, after all this time in the business, there is now no need to do any promotional touring. I have this statement in writing. I attempted to show them, and tell them that this was the industry standard, approved, well-documented, way to build one’s fan base, to expand on it, to inspire interest in one’s work because of the direct contact one has with an audience. They replied that there’s no reason to return to the same cities and venues, and that I’m wrong, that I’m really touring only for pleasure and recreational reasons.
Touring is hard [bleeping] work, and I think they know it. They’re just trying to misrepresent me, so they can dissolve my business and collect back taxes which they can say I deducted wrongly because if they win, they can say I was never running a business. And I’m an easy target. I’m an artist. Artists are easy targets.
I’ve spent a lot on my career, I’ve financed it with credit cards because I was transgender and out in the early days, and way too controversial for others to feel comfortable in investing in me. I invested a great deal, and I still owe a large amount of credit debt. We’re not rich people who pretend to run a vanity business, finance it out of their large savings resources, and claim deductions on everything so they can avoid paying taxes. I’ve sweat blood to keep my art going because people tell me how important it is to them. And because, yes, it’s my calling.
They’re trying to go after the easiest targets, the ones who can’t afford to fight, the ones who have had a hard struggle and which is reflected on their tax returns. So they can build an easy case. So they can win. So they can claim money. So they can maybe then say, "Look at all these artists, these government freeloaders. Why are we supporting these tax abusers?" That’s why they’re making an example of me by this audit.
MP: What is the taxman’s definition of success?
DeMars: The tax guy said that by this point in my career I needed to be signed by a major label, that I should have been signed to a major label by now, that I needed to be signed to a major label to establish myself. [He said that] there was no evidence that I was actively sending my records to major record labels, so therefore I must not be interested in profit, and not running a for-profit business. I told him that as an independent artist I get 100 percent of all records sold, and that I intend to run my own label, and stay independent.
Now he says I have not promoted myself in any way that is appropriate enough to result in any substantial sales as an artist, and that there is no documentation that I ever self-promoted myself. I [offered up] a bag of magazine articles spanning those 10 years, and prints of reviews and previews, my Playboy magazine interview, my U.K. Powerplay Music Magazine three-page feature after we’d first toured England. Tons of documents about how effective I’d been with self-promotion. This was at the very start of the first meeting. When I was taking these documents out of the bag, he stopped me and said, and I’ll quote him as close as I can: "I know, I know. Big transgender rock star. I’ve seen all your videos online. Very talented. I’m over it! I don’t need any of that. I’m a numbers guy. Let’s talk numbers."