Chicago Tribune: Commissioner seeks to exempt clubs featuring DJs from amusement tax law

By: Dawn Rhodes

A Cook County board member wants to change the amusement tax ordinance in response to a court case in which the county is seeking $400,000 in unpaid taxes from two West Town venues.

Commissioner John Fritchey on Tuesday filed his amendment of the 19-year-old law.

The county collects 3 percent of ticket prices for live performances of music, theater, sports and other entertainment. Cook County is asserting that Evil Olive and Beauty Bar, both in Noble Square, have ducked paying their share for years, while the owners argue their venues are too small to be taxed under the ordinance.

The move comes about a week after a court hearing in which an administrative law judge suggested she did not think DJ-produced music, which both businesses feature, qualified as a live musical performance as defined by the law. Under Fritchey’s proposed changes, shows featuring DJs would be explicitly exempted from the tax.

“I don’t believe that government should be playing culture police and deciding what constitutes ‘music,'” Fritchey said in a statement. “Going after small businesses who have in good faith complied with what should be a common sense reading of the law is just plain wrong, and to have it happen in a city that has given the music industry some of its most famous DJs and rappers just adds insult to injury.”

Fritchey said his changes are designed to more closely match how the city of Chicago charges its amusement tax and eliminate intergovernmental confusion. He also said he sent a letter to Board President Toni Preckwinkle asking that the county revenue department suspend efforts to collect back taxes from other businesses so long as they have complied with city policy.

Cook County spokesman Frank Shuftan said officials had not yet reviewed the ordinance and could not immediately comment.

In an interview with the Tribune this week, Cook County chief financial officer Ivan Samstein said the county does not use musical genre as a barometer for who should pay the tax. Authorities do differentiate, however, between a DJ producing original songs versus simply playing prerecorded music.

“If a DJ is creating a new, original composition in the way they put sounds together, then that is also tax-exempt,” Samstein said.

The proposed changes seem to mirror that distinction. Under Fritchey’s amendment, DJ music would count as a live musical performance if the DJ was mixing their original work or used prerecorded music they compiled themselves. The condition also requires that the performer is paid a fee “substantially higher” than someone who simply plays recordings.

Fritchey lists several other scenarios in which a DJ also could be considered exempt from an amusement tax, including if the performer is featured in advertisements from the venue or if the DJ is represented by a manager or an agent.

Samstein would not comment on the cases against Evil Olive and Beauty Bar, but said court disputes typically arise only when businesses repeatedly ignore requests from county auditors to determine whether their entertainment is taxable.

“If you fail to comply, I have no way of knowing what’s going on there,” Samstein said. “It’s ultimately a question of fairness. Why should one bar or venue have to pay a tax and another one feels they are exempt and doesn’t have to cooperate in the process?”

Fritchey plans to formally introduce his proposal Sept. 14 at the next county board meeting.

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