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State Investigates Artist Venus DeMars for Not Making Enough Money Off her Art

Venus DeMars, wearing tall black boots and a goth outfit

It's not often that income tax audits make big news, but the mammoth of an audit that's been thrown Venus DeMars and Lynette Reini-Gambell, a married couple and a relatively successful musician and poet respectively, has been getting some local press in their home state of Minnesota. This MinnPost article features an interview with the couple in which they discuss the details of the situation, but in short: the Minnesota Revenue Department is claiming that the couple's respective artistic careers are not profitable enough to qualify them as "professional" artists and is demanding around $100,000 in back taxes for work-related tax deductions the couple has claimed over the years. In DeMars' words, the Minnesota Department of Revenue is "throwing the book" at the artists. Complicating the matter are suspicions that the audit might be bias motivated stemming from the women's relationship or from DeMars' status as an out transgender woman.

Though it's just one tax case in Minnesota, the artists' case raises some large, unsettling questions about what is considered "legitimate" art.

BIG UNSETTLING QUESTION #1: Why does the government definition of a "professional" artist depend on their profits?

Venus, who leads the punk-glam band All the Pretty Horses, discusses the audit this way: "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. 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."

Of course, I understand why the government would want a "profession" to bring in at least as much money as it costs. But by DeMars' and Reini-Gambell's account, the standard is far more stringent than that. DeMars reports that the auditor criticized her for not working hard enough to earn a profit, for failing to charge royalties for every use of each her songs, and for touring too much—basically for doing things that any independent musician would do to promote their work. Of course, the idea that DeMars is an independent musician seems to be a problem in itself. DeMars recalls that the auditor repeatedly chastised her for not having landed or even pursued a record deal with a major label. Such a comment may seem strange (she is, after all an independent musician), but in fact reveals a well-worn and uncomfortable truth: the government is interested in supporting big, expanding businesses. It's not enough that the multibillion dollar record labels have grown to the point that it becomes nearly impossible for independent musicians to succeed outside them (see also: filmmakers, authors, booksellers, coffee shops) but it appears that that economic power needs the hefty hand of the state to back its interests.


BIG UNSETTLING QUESTION #2: If someone doesn't make a profit off their art, are they legally not allowed to consider themselves artists? 

While the still-recovering economy may make it seem like a good idea to force artists of all stripes into a profit-driven business model, that logic has potentially serious repercussions for who can afford to be a maker of art—and by extension, what that art can contain. In enforcing a particular business model on artists, the government is necessarily enforcing its own values—of profit, expansion, economic growth—on one of the groups of people best positioned to challenge, interrogate, and reformulate those values. Of course, artistic careers are already expensive and difficult to sustain, meaning economic privilege already gives a good chunk of aspiring artists a serious boost. It's an existing problem, why exacerbate it? Artistic communities have long been spaces for exploring new ideas, creating new cultures, for subversion and invention. How do artistic communities change when they're put under this kind of pressure to be profitable? How does art? Will the subversive, the challenging, the work that questions mainstream values be pushed out? Relegated to "hobby" status? Or will its practitioners be forced to lead a double life that's familiar to many: earning 9-to-5 profits on Fuck-the-Man work? 

BIG UNSETTLING QUESTION #3: Why is the state tax agency hellbent on claiming these two artists aren't artists?

From DeMars and Reini-Gambell's description, the auditor himself is a real jerk. He was mockingly dismissive of DeMars' celebrity ("I know, I know. Big transgender rock star. I've seen all your videos online. I don't need any of that. I'm a numbers guy.") and both DeMars and Reini-Gambell expressed the concern that they were being made an example of by the audit. DeMars' credit card debt (which she accumulated early in her career) makes them "easy targets" because they can't afford a legal battle. The point of the audit, it seems, is to expose government spending on "freeloading artists," presumably to support a conservative agenda that cuts such frivolous spending. Who chose this particular (and fairly successful) couple as the target of such an overwhelming and suspiciously intense audit?

Which brings us to the BIG UNSETTLING CONCLUSION: There's something in this case that reeks of LGBT-based discrimination.

There's nothing explicit—and in fact neither DeMars nor Reini-Gambell express that suspicion—but still, the alarm bells in my head won't stop ringing. Public support for LGBT civil rights is surging, but as we've seen over and over, inclusionary and anti-discriminatory legislation doesn't mean discrimination will end. Rather, it simply means that those discriminations become subtler, less explicit, and thus less able to be proven discriminatory. While the letter of the law may be even-handed, auditors and prosecutors have a lot of discretion in how they enforce the law. Our legal system still has hula-hoop sized loophole through which the people who occupy positions of power may follow existing prejudice to their hearts' content. 

 

Photo of Venus DeMars via BrieAustin.

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Comments

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quick correction

It's a state tax issue, not federal. The IRS has nothing to do with it.

Thanks!

We fixed that reference.


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Nope, the article still

Nope, the article still references the IRS.

This whole article is

This whole article is ridiculous. The state thinks they cheated on their taxes because they wrote off too many expenses that didn't qualify because they don't qualify as professional artists because they don't make enough money to do so. Which is a reasonable thing.

To think that this has anything to do with their LGBTQ status is utterly ridiculous. The state could care less (as well as the auditor) who they are, what their status is. The only thing they care about is if they cheated on their taxes or not. Anyone can be audited. Do you think that the people at the state tax office looks people up and sees that they're gay or trans and decides that way? All they see is a name and a tax ID number.

You obviously don't know a lot about tax reporting, and they're dumb if they didn't consult a tax advisor before writing off all of their expenses relating to their art.

If you bothered to read the

If you bothered to read the original article, you would know that they have been using an accountant for more than a decade, and the accountant has said that he has never seen anything like this. I also showed the article to my accountant, and he was stunned that a state government would pursue this kind of inquiry when the IRS seems satisfied.

I doubt it, and if that's

I doubt it, and if that's true, then the accountant was obviously a terrible accountant.

Either way, the state tax office does not specifically target people, especially obscure LGBTQ artists. For this writer at Bitch to outright say that the government is attacking them because of their sexual identity is absurd. Talk about grasping for straws. What, are you going to say that when anything remotely bad happens to a person who is gay or trans, the automatic assumption is that it happened to them because they're gay or trans?

Why are you so

Why are you so foaming-at-the-mouth convinced that this could not have happened the way the PEOPLE WHO EXPERIENCED IT PERSONALLY have said? What is it that irks you about this?

Bull S*#T!

How horrid that these two would be made an example in terms of taxation. They have been, what I consider "professional" musicians for decades. If they showed a profit, which I am sure they are required by law to claim, then why cannot they right off expenses? As one tax prepared once told me "When Self Employed, LIFE is Deductible".
This is how self employment taxes work. I have been self employed since 1999. The IRS cannot have it both ways. Period. Maybe they should look at GE, Halliburton, EXXON Mobil and others to bridge the gap to the horrendous Federal Deficit from hell. Leave Independent Artists alone...and all other self employed people who work their asses off.

From what I understand, the

From what I understand, the issue here is that they did *not* claim a profit for too many years, hence triggering the 'hobbyist' assignment to their tax status. No one is saying their art isn't worthwhile, and I'm also pretty sure tax auditors don't really care about one's line of work, just the taxes. They seem to be saying that they are not allowed to write off continued losses year after year. Really, this seems to be something the tax preparer should have warned them about. The tax law is extremely clear on this issue. When you hire someone to do your taxes, I think it's a fair assumption that they will make sure you aren't claiming anything incorrectly. $100,000 seems like an astronomical amount to owe. It's really too bad; I think even Turbo Tax would have alerted them that they were claiming too many losses (I believe the rule is 3 years out of 5.)

This is not a hobby

I have played in Venus' band, All The Pretty Horses, for the past six years and I would like to assure you that this is not a "hobby band". I know people who make and play music in their spare time as a hobby. Venus is a full-time, nose-to-the-grindstone bona fide artist. Not all artists are the best business people but Venus is very smart and very savvy and has done everything possible to make a profit. Not everything works. The rules change and you have to adapt. What you can't do is give up. You have to keep going even if you are losing money. There is no law against losing money. The 3 in 5 rule is not a law but it will likely trigger an audit.

No one likes to get audited but Venus and Lynette had nothing to fear. They had done everything right. All of their income was accounted for and all of their expenses well documented. But this was not a typical audit. This was a witch hunt from the very beginning. I don't know if it has anything to do with Venus being transgender or not. Personally I think that it is an assault on independent artists in general. I believe that the MN Department of Revenue just thought Venus and Lynette were easy targets.

My hope is that the community will band together and prove them wrong. Many big thanks to Bitch Magazine for sharing this story.

Thanks LeFreak ;)

First... I just wanted to say Thanks to my bass player LeFreak. (I stayed away from reading article comments during our Audit-Hell fight... frustrating when I couldn't directly respond (our Lawyer's request) ...SO I've just come across this.

Second, I'd like to give an update. The state turned their accusation around for Lynette just a month after this article was printed, and after we were able to retain a Lawyer because of our going public, and thus were able to obtain enough donations to afford one.

I however, sparked quite a bit of anger from our auditor because of going public, and He insisted in NOT backing down on his accusations against me. However, when we entered the Appeals process, and finally re-interviewed me, they made a complete 100% turn around and dropped their case against me. No penalties, No nothing except a $70 refund to me from them because of some re-adjusting on one aspect of income I'd reported that they deemed a "gift" as opposed to income as I'd reported it as.

Basically, AS OF May 29th 2014, Lynette and I won.

And finally, to do the final update... as of 3 weeks ago, My band and I have accepted an invite to tour as the opening support act for Laura Jane Grace and her band "Against Me" on the August leg of their tour. 13 gigs from Aug 6th through Aug 22nd. (2014)

I believe that's nice way to validate all the years I've worked... yes... now that we've made it through our 1 year and 6 months Audit-Hell and won, all the years I've worked as a professional artist.

Finally, Thank YOU Bitch Magazine for addressing this difficult, but now past aspect of my career here in this article.
(PS LeFreak...I'll be seeing you on tour in just a few weeks..the van's almost ready!)

-Venus de Mars
http://www.twitter.com/venusdemars

Taxes AND Interest AND Penalties

I'm willing to bet that this $100K owed includes interest and penalties. Which means what they ACTUALLY claimed could easily be less than half that, depending upon the amount of both (interest and penalties) involved, since they tend to add up quicker than payday loan debt. Over a decade, then, it's reasonable to guess they could have made claims of maybe $5k a year (since this article cites "over the years," I'm assuming a decade reach, but it could be more or less...state laws tend to allow auditors to reach back MUCH FURTHER than the IRS generally can). These women weren't living high on the hog in government money. $5k in business expenses annually isn't an egregious amount of money, by any measure. There are assumptions here that these are all losses claimed and not just straight business expenses, and yet, while losses are obviously a part of the scenario, it's possible that business deductions are also at play here. After all, if they're "hobbyists," they can't claim business deductions for their "hobby."

Careful with your deductions

Whoever told you "When Self Employed, LIFE is Deductible" was wrong. You deduct expenses related to your business only. Moreover, you can't deduct more than you make, which, from my reading of this article, might be the issue.

Venus needs a better

Venus needs a better accountant, obviously!

This article, however, is not well-researched. I think you're reading way too much into the case and issuing a very knee-jerk reaction.

The so-called "unsettling question" #1 is actually quite legitimate. For the purposes of taxation, we need to distinguish between a for-profit enterprise and a hobby. Distinguishing between what is and is not art and who is and is not an artist is a philosophical topic. The article seems to conflate these two unrelated discussions.

Also, this is a state tax issue, not federal, so the IRS has nothing to do with it.

I think some of the

I think some of the commenters are missing the main point of this blog post.

The main point comes in the author's last paragraph:

"Public support for LGBT civil rights is surging, but as we’ve seen over and over, inclusionary and anti-discriminatory legislation doesn’t mean discrimination will end. Rather, it simply means that those discriminations become subtler, less explicit, and thus less able to be proven discriminatory. While the letter of the law may be even-handed, auditors and prosecutors have a lot of discretion in how they enforce the law."

She is not saying that the audit of Demars and Reini-Gambell WAS discriminatory. She is saying that it MIGHT have been, because discrimination often takes on subtle forms when it is no longer acceptable for it to be done blatently. Her point is that discrimination can go underground and then be "hidden" within something that appears legitimate. And that possibility, whether it is an actuality in this case or not, is what set off the alarm bells in the author's head.

Taxes

It's not at all evident that if this was a straight couple the audit would not have been done. It is clear that if it were a couple of straight artists Bitch would not have written about them. It is also clear that, as was stated earlier, "business" vs. "hobby" is not the same as "artist" vs. "hobbyist".

We can speculate all we want, but what they really need is a tax attourney who is willing to take on some pro-bono work to help them out. And the attorney can write off his time spent on the case.