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So far the focus seems to be on unemployment, but I can see the IRS coming into the game.

http://www.kansascity.com/2013/02/03/4047438/exotic-dancers-...

The decision in the case of Milano’s v. Kansas Department of Labor Contributions Unit ends a 7-year legal battle over the employment status of semi-nude female dancers at Club Orleans, a Topeka gentlemen’s club.

The court case.

http://www.kscourts.org/Cases-and-Opinions/opinions/SupCt/20...

I wonder if the strippers were reporting all their tips on the 1040 Schedule C and deducting the "space rental".

Jean
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I wonder if the strippers were reporting all their tips on the 1040 Schedule C and deducting the "space rental".

You might be surprised. I have several clients who are "entertainers" who keep track of their income and expenses and file Schedule C and city/county business forms every year.
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I wonder if the strippers were reporting all their tips on the 1040 Schedule C and deducting the "space rental".

I have a friend who was in that line of work for a while. I do not know what she did with her taxes.

I do know that such workers were not considered employees by the establishments where they worked. In particular, they were not paid even minimum wage. They were not paid at all. They had to pay something like $75/night for the privilege of working there. So no W-2. No 1099. Nothing. Their income depended on their tips. They were required to have a license that cost $100/year. This legally allowed her to work in any number of establishments, which was important because they were never allowed to work full time. But the first employer seized the license and kept the licenses in his safe to safeguard them. So the girls had to get multiple licenses. It is a rotten business to be in, not because I see anything inherently bad in doing that kind of work, but because of the sleazy ethics of those who run it.

And making tips was problematical. If you were closer than some distance from a customer, you had to keep all your clothes on. Somewhat farther away, you could have most of them off. You could not have them all off. But if you obeyed the law, your tips were lousy. To survive, you had to break the law. But if you got caught, you got arrested and fined, so you lost your $75 fee for working there and who would pay your baby sitter? They got very good at recognizing plain-clothed policemen and acted accordingly.
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Interesting. I guess the rules depend on the state. None of the articles mentioned a license in Kansas.

I was thinking more on the lines of how the state was going to determine the wage for figuring the unemployment ins. and the ex-employees unemployment.

If both the employer and employee would then have to ammend the Fed tax returns? Would the employer have to pay their portion of the FICA/Medicare and could the employee get the amount they paid back?

Jean
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But Jean, you're in landscaping, no? Thinking of moonlighting during the slow seasons?
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<i.I do know that such workers were not considered employees by the establishments where they worked. In particular, they were not paid even minimum wage. They were not paid at all. They had to pay something like $75/night for the privilege of working there. So no W-2. No 1099. Nothing. Their income depended on their tips. They were required to have a license that cost $100/year. This legally allowed her to work in any number of establishments, which was important because they were never allowed to work full time.

I was with you until the last sentence. Wouldn't not allowing them to work full time make them employers? I guess they could word the contract so that the only time there was space available was for less than full time.

But the first employer seized the license and kept the licenses in his safe to safeguard them. So the girls had to get multiple licenses.

Huh? I would go to the licensing dept (state?) and tell them my license was seized. Couldn't they just use a copy?

Jean
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But Jean, you're in landscaping, no? Thinking of moonlighting during the slow seasons?

Hmmmm, Hadn't thought of that, but I don't know if I would get many tips, being older than dirt with too many wrinkles from too much working in the sun. Of course, not being able to dance might have an impact, too.

Mostly thinking about it because I'm always asked about contract labor vs employee.

The last one was a bookkeeper that was hired by a friend of mine. Her husband worked for the railroad. It's her understanding that she can't draw retirement on her husband's railroad account and SS. She didn't like having to pay into SS since she could never get it. If the railroad/SS is true it's one case where I do think paying into SS is unfair.

But that is life. I explained she'd have to pay both portions as a contractor. She's a great lady. She wasn't really trying to get out of paying taxes.

Jean
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Interesting. I guess the rules depend on the state. None of the articles mentioned a license in Kansas.

I imagine they do. It was required in Washington State, and as far as I know, not required in New Jersey.

I was thinking more on the lines of how the state was going to determine the wage for figuring the unemployment ins. and the ex-employees unemployment.

In Washington, the "dancers" are not employees (receiving a W-2), and are not even self-employed contractors (receiving a 1099). So if they cannot work anymore, they are not entitled to unemployment insurance, since they were never employed in the first place. Similarly for workman's compensation for on the job illnesses or accidents.

If both the employer and employee would then have to ammend the Fed tax returns? Would the employer have to pay their portion of the FICA/Medicare and could the employee get the amount they paid back?

In Washington, the employer would not have to amend anything, since they do not file anything. The people are not employees. They are just there, and have to pay for the privilege. Since the dancers get income (tips) from what they do, they do have to pay income tax on it. I do not know if it is "other income" on the 1040, or self-employment tax (schedule C?).

It is tough out there.
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I was with you until the last sentence. Wouldn't not allowing them to work full time make them employers? I guess they could word the contract so that the only time there was space available was for less than full time.

They are not employers, because they do not pay the dancers. The dancers pay them. I do not know why they do not allow full time work. Perhaps they want more different faces during the week than they would get if they had a smaller full time group of girls. Or perhaps there is some law that regulates people who work over 25 hours a week.

There is no contract. The dancer shows up each evening and the owner either accepts their $75 and allows them to perform, or refuses it and does not allow them to perform.
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But the first employer seized the license and kept the licenses in his safe to safeguard them. So the girls had to get multiple licenses.

Huh? I would go to the licensing dept (state?) and tell them my license was seized. Couldn't they just use a copy?


They can go to the licensing department, but the response is that they should tell the employer to return their license. Which he will do, but then she cannot work there anymore.

A copy is not recognized, so not, they cannot use a copy.
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But we aren't talking about Washington. The court case was Kansas. The Supreme Court said they were employees. I was just curious about the full impact of that decision.
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Hmmmm, Hadn't thought of that, but I don't know if I would get many tips, being older than dirt with too many wrinkles from too much working in the sun. Of course, not being able to dance might have an impact, too.

I talked with my friend in those days and she had many interesting stories to tell. She later owned a club, the only one with a grandfathered liquor license. All the others could server water and soft drinks only. She offered to give me free tickets to her club. I asked if there was any art involved in the dancing and she said no, the only art was how fast you could get your clothes mostly off. So I never went to see the show. I did go there once, and had an interesting conversation with the bar tender (who kept her clothes on the whole time. But the dancers were not attractive to me. I suggested to my friend that she have her bartender dance, but she said that was bad business. Dancers are a dime a dozen, but a good bartender is hard to find. The way to make good tips is to have good repartee but not so good as to make the customers appear stupid. The dancers thought most of the customers were stupid, and probably they were.

She had to quit when she was too old (about 30). She was still very sexy looking, but the problem was that the men wanted to feel more intelligent and more powerful than the girls, and by the time women approached 30, they were perceived to be too intelligent and intimidating to the men. My other friend, in New Jersey introduced me to some of her fellow dancers. Almost all of them had kids, and many of them were married. The customers did not know that.
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And making tips was problematical. If you were closer than some distance from a customer, you had to keep all your clothes on. Somewhat farther away, you could have most of them off. You could not have them all off. But if you obeyed the law, your tips were lousy. To survive, you had to break the law. But if you got caught, you got arrested and fined, so you lost your $75 fee for working there and who would pay your baby sitter?
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Boy, when I was in school, they never taught any of this stuff in tax class. It was mostly theoretical.

Bill
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