John Hart and Corban Addison Klug both make a living writing novels. Unlike writers for newspapers and magazines, which state code exempts from business license taxes, Hart and Addison received sizable tax bills from Albemarle County and Charlottesville that they say are unconstitutional.
The two men filed lawsuits against the city and county July 24, represented by the Arlington-based Institute for Justice, a “nonprofit, public interest law firm that litigates cutting-edge cases,” according to attorney Renée Flaherty.
The libertarian institute focuses on government overreach in cases involving private property, occupational overregulation, free speech, and school choice. Its most famous case, and the only one it lost before the U.S. Supreme Court, according to its website, was Kelo v. New London, which spurred an eminent domain backlash against government confiscation of property for private development.
In this case, the city and county “unconstitutionally discriminate between different kinds of speech,” says Flaherty. “Instead of protecting and supporting its creative community, Charlottesville and Albemarle County have decided to treat it like an ATM.”
Klug, who writes under the name Corban Addison, has lived in Charlottesville since he attended law school here in 2001, and has written four novels that address human rights issues. Because he offers no goods or services for sale in the city, he was unaware he was subject to business taxes—until he got a notice from Todd Divers, the commissioner of revenue, who also is named in the suit, advising him he may need to pay up.
“I’m committed to paying my taxes,” says Klug. But he believes he should be treated the same as the press and also get First Amendment protections.
Klug says he ended up paying the city almost $2,600 for three years in back taxes, penalties, and interest on his gross receipts, which don’t allow the deductions for travel or other expenses that he would get on his income taxes.
Hart, a former lawyer and financial adviser, spent 15 years trying to be a published author. His six literary thrillers in Southern gothic settings have been New York Times bestsellers. “I need a laptop and pure imagination, he says. “I don’t understand why the county feels they’re entitled to a piece of that.”
In 2016, he—many other local freelance writers—learned that the county, which had hired two full-time business-tax auditors, did indeed believe it was entitled to a piece of his income going back to 2011. He’s coughed up nearly $11,000 in taxes, penalties, and interest, which he paid under protest.
Besides claiming the business tax on freelance writers is unconstitutional, Hart and Addison also allege city and county tax officials “exploit” the code, which they say is vague and doesn’t list writers or authors among those businesses and services that must pay 36 cents per $100 on gross receipts if they earn over $100,000. Writers who earn less pay a flat fee that starts at $35 in the city and $50 in the county.
While other localities like Arlington have business taxes, they don’t target writers, says Flaherty.
When individuals are self-employed, they file a Schedule C on their income taxes to report profit or loss, and local tax collectors have access to those forms.
In 2016, Charlottesville didn’t regularly go after freelance writers. Divers told C-VILLE then, “The juice has got to be worth the squeeze. I don’t know how much it’s worth with our workload. We do check Schedule Cs occasionally.”
Divers declined to comment about the suit, and Bill Letteri, his counterpart in the county who is named in Hart’s suit, did not respond to an inquiry from C-VILLE.
The authors want the courts to declare the business license ordinances unconstitutional and to refund the taxes they’ve paid.
