An artist can fight the tax man
Venus DeMars has spent the last year and a half working on her taxes – and she's finally done.
This week, the transgender rock musician learned that she had prevailed in a battle with the Minnesota Department of Revenue, which had determined that she owed the state $3,535 for three years of back taxes.
"It’s good to have it all done and finished," DeMars said. "I wish it had never been a part of my life."
In November, 2012, DeMars received a notice from the department that it would audit her tax return. DeMars, who uses an accountant to file her taxes, wasn't worried at first. But it soon became clear that the auditor did not consider her a professional artist, and therefore would not allow her to write off thousands of dollars in expenses related to touring with her band.
"If I'd heard this happening to somebody else my immediate suspicion would have been 'well, something must have been wrong -- they must have filed something or they did something wrong, '" DeMars said. "The government wouldn't do this kind of thing."
State auditors initially included DeMars' wife, writer Lynette Reini Grandell, in their review but later removed her from it. DeMars decided to appeal the ruling rather than settle. In the process she went public, putting on concerts to raise money for the battle.
"It's not a fight about me and my issue," she said. "This is an arts community fight -- and thank *God* that people were there willing to help us see this through."
But the audit took its toll. DeMars said not only did the legal battle hurt her career, it also hurt her health. In May, 19 months and more than $12,000 in legal fees later, DeMars received a letter from the Department of Revenue informing her that it had reversed its initial determination; officials determined that she was indeed a professional artist. In its calculations, the department found that it owed her a refund, and included a check for $70.
"They're not really giving me much except that now I can start over again," DeMars said. "I can get back to my life, I can get back to what I should be doing, I am an artist again."
While DeMars' case is closed, others are not so fortunate. Artists currently being audited were willing to talk off the record but worried that speaking publicly could hurt their cases.
"We have been alarmed that recently there has been a real increase in the number of artists that are calling us for help around auditing issues," said Laura Zabel, executive director of Springboard for the Arts. The organization runs a program that connects artists with lawyers who are familiar with their particular legal needs.
Zabel said she can only hope that the increase in calls to her office is not because there's been an increase in audits, but because Venus DeMars has raised awareness of the resources available to artists.
"I think that the community is really lucky and should be very grateful that Venus stuck this out," Zabel said.
According to Zabel's estimates, there are about 30,000 professional artists working in Minnesota. Because artists are often both self-employed and low income earners, they are particularly vulnerable to financial upsets -- the kind that come with putting a career on hold to fight a tax battle.
Terri Steenblock, assistant commissioner of individual taxes at the Minnesota Department of Revenue, declined to comment about the Venus DeMars' tax case.
"It's really important to note that the individual income tax information is private, non-public information," she said.
Steenblock said her office takes the confidentiality of taxpayers very seriously. She said the manner by which the Department of Revenue selects the people it audits is also confidential.
When asked how many artists the department audits in an average year, a spokesperson said it does not track that information.
Zabel, of Springboard for the Arts, said tax lawyers are working to convince the Department of Revenue to change its policies so that artists like DeMars will not have to go through extensive, painful and ultimately unnecessary audits.
DeMars said the revenue department's lack of transparency is frustrating. But the last nineteen months have taught her a few things, which she plans to share with other artists.
"We have to get the auditors' mindset to change so that they understand what we do as artists," she said. "And I think pressure and consequence is the only way those things will change."