Writer tax: County is all business in targeting freelancers

Writer Kathy Erskine considers herself a law-abiding citizen, but found out recently that she’d been breaking the law by not having an Albemarle County home business license, which she has since obtained for a one-time $27 fee. Photo by Eze Amos Writer Kathy Erskine considers herself a law-abiding citizen, but found out recently that she’d been breaking the law by not having an Albemarle County home business license, which she has since obtained for a one-time $27 fee. Photo by Eze Amos

In an area crawling with writers, it’s a well-known fact: Unless you’re a John Grisham or Jan Karon, the odds of being able to pay the rent by writing are pretty low. Nonetheless, that hasn’t deterred Albemarle County from requiring a $50 business occupational professional license—and collecting it for the past five years, with interest and penalties.

A slew of local writers, among other Virginia Department of Taxation Schedule C filers, were recently hit with notices that they need the license if they earned more than $5,000—and if they make more than $100K, they have to pay a percentage of gross receipts.

National Book Award winner Kathy Erskine was one of those taxed. “The shocking thing was to learn I need a business license to be a writer,” she says. “It’s not intuitive for writers and artists to know they’re a business.”

Erskine received plenty of publicity when she won the National Book Award for Mockingbird in 2010, “so it’s not like I’m hiding,” she says.

She had to pay back taxes for five years—plus interest and penalties. And because she had an unusually good year after winning the award, she had to pay a percentage of her gross receipts. “Not net,” says Erskine, which meant she couldn’t take off her expenses for travel or advertising.

Erskine also learned she had to have a home business license, which requires a $27 one-time fee.

“I never would have guessed—it’s so crazy—that when I’m sitting at my kitchen table writing, I would need a license,” she says.

Vampirina Ballerina author Anne Marie Pace also was dinged by the county. “I don’t have a problem with taxes in general because they go to roads and schools and things I value,” she says. “It seems a little odd to me that it seems to be coming out of the blue.”

That’s because Albemarle’s finance department has hired two full-time business-tax auditors, according to director Betty Burrell, and the notices are the result of the auditors “fulfilling their job responsibilities” and following something called the audit work plan.

Burrell points to county code, which has a lengthy listing of business purveyors who must have licenses, and although writers don’t show up on the list, they’re still defined as a “business service,” explains Burrell in an e-mail.

[Disclosure: In the course of reporting this story, this reporter also found a notice in her mailbox, presumably sparked from making $6,971 from freelance writing while unemployed in 2014.]

At press time, the county had not responded to questions about its decision to collect license fees from five years back, except for this in an e-mail from the county attorney’s office: The authority to collect taxes and fees is outlined in county code. “Thus, Finance is administering tax collection, not making ‘decisions’ to collect.”

Nor had Albemarle shed light on whether anyone who isn’t a W-2 salaried employee is expected to have a business license, how much it expects to collect from the combing of Schedule Cs and how much the new auditors are getting paid.

“I think they shouldn’t charge five years back,” says Pace. She says she didn’t have the money in her business budget and had to use personal funds to pay the $250 tax bill.

“It’s an unpredictable income,” she says. “I can work and not make money. I got a $4.77 royalty statement the other day.”

Charlottesville, too, requires a $35 business license for anyone making less than $50,000. However, it doesn’t actively seek out an artist who made $200 and filed a Schedule C on her taxes, according to Commissioner of Revenue Todd Divers.

“The juice has got to be worth the squeeze,” says Divers. “I don’t know how much it’s worth with our workload. We do check Schedule Cs occasionally.”

Good news for buskers in the city: They are not required to have a license. “If they’re taking donations,” says Divers, “they’re not charging. They’d be playing anyway.”

Not everyone taxes its creative folk. In Ireland, the first 50,000 euros writers, composers and artists make is exempt.

Local writer Janis Jaquith says she didn’t make enough to be on the county’s hit list, and calls the tax regressive. “It doesn’t seem fair when the little guy has to pay more,” she says.

“If you want to be a freelance writer, it’s like taking a vow of poverty,” she adds.

“This is the county squeezing the lemon tight,” says Neil Williamson with the Free Enterprise Forum. “I understand they’re looking for money everywhere.”

Williamson thinks taxing based on gross receipts is “stupid” and the business occupational professional license should be eliminated.

Says Williamson, “This is what business-friendly looks like in Albemarle County.”

Correction 11/3/16: The caption omitted the word “home” in the type of business license Kathy Erskine obtained for a one-time $27 fee.

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