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Thread: Tipping Out

  1. #1
    Member MikeSouth's Avatar
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    Default Tipping Out

    I have a serious question here. It is probably one that would send the clubowners to my house with guns but it is one I have always wondered about.

    By law if a person pays another person more than 600.00 a year they are required to file a 1099 with the IRS. This makes the money tax deductible for you. Now if the person paid is actually incorporated with a federal tax ID number (not a SSN) you don't have to file the 1099. I know house moms and DJs aren't incorporated, do you guys send them 1099s?

    It seems to me that this whole system that is set up by the club owners to avoid having to pay you guys and provide any sort of benefits or workmens compensation is ripe to be investigated by the Feds.

    Your thoughts are appreciated.

  2. #2
    Banned Melonie's Avatar
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    Default Re: Tipping Out

    Hey Mike, when you open a can of worms you don't fool around, do you ?

    In the state of California, a new law was enacted last year which defines exotic dancers as statutory employees. Therefore by the letter of this new law, clubs are supposed to withhold taxes and file W2's for their dancers, and it is totally illegal for clubs to require tipouts to DJ's, house moms, etc. Therefore in California if a dancer gives money to a DJ or House Mom, it would have to be considered as a non-deductible charitable gift rather than a payment (since requirements to pay DJ's and house moms would be illegal under state law), with no 1099 therefore required regardless of the amount. Or maybe not! California in particular faces such a quagmire of tax classification interpretations as a result of this new law that the tax courts will be busy for a year sorting it out. Clubowners and dancers are, I'm afraid, going to be rudely awakened once court precedents are set and the audits, labor law violations, underreporting of income and non-payment of estimated tax charges start flying.

    In my home state of New York, dancers are considered to be independent contractors. Technically we are required by law to tipout to DJ's and house moms, but it's considered to be a tax-deductible business expense for professional services and no 1099 need be issued for these payments (same as paying an attorney $600+ in legal fees, no need to issue a 1099). Truthfully, I have never heard of a dancer issuing a 1099 to someone she has paid in a club, even if the total annual amount exceeded $600.

    I totally agree with that the de-facto reality of the situation is that clubowners try to "have their cake and eat it too". They try to treat dancers as independent contractors when it is in the club's benefit to do so (i.e. no benefits, no unemployment or comp coverage, no employer tax contribution, charging stage fees, locker rentals and "commissions" on private dances and champagne room trips, not paying minimum hourly wage), and then turn around and treat dancers as employees when it is in the club's interest to do that instead (assigned work shifts, club rules, charging fines).

    One of these days the clubowners are going to find out that they can't have it both ways, even though they have gotten away with it for years. So far only a handful of clubs have run afoul of the IRS to the point where the independent contractor versus employee issue was actually put before a tax judge, and all of these cases came out unfavorably for the clubs. Currently, the casino industry is the focus of IRS attention along these lines, and the casinos are resorting to making a "settlement" with the IRS where they admit no violation but agree to report the incomes of their waitresses, dealers and other staff members (including estimated tip income). I suspect that when the shit hits the fan in California that many clubs will resort to similar "settlements" to save their own butts, but at the expense of their dancers who will have every dollar of their incomes reported. Hey, Gov. Davis has is ass in a major sling with the monstrous California state budget deficit, and he'll have the Franchise Tax Board turning over rocks to find sources of potential state tax money which have yet to be fully tapped.

    In the end, California dancers may actually get some semblance of employee benefits which are supposedly mandated under the new California employee dancer law - providing that California clubs don't go bankrupt having to pay 7.5% SSI tax plus comp plus minimum hourly wage to their dancers. The clubs will probably fund this by exercising their newly bestowed employer's right to require employee dancers to perform private dances and champagne room trips with no extra payment as part of the dancer's 'job description', and keep 100% of the private dance and champagne room proceeds for the club.

  3. #3
    Pamela
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    Default Re: Tipping Out

    I do know that as an ex phone sex operator and being an IC, it was stated that if you do not make $600 per year, you do not have to file.

    But i did not have to worry about that, i filed and got paid back.

    As a dancer, also IC, i did have to pay out Dj, and housemom and no 1099 for me. One club i was an employee and DID NOT have to pay out anyone. I recieved a W2, and all was taken care of on the form, just turn it in to my accountant.



    Pamela

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    Member MikeSouth's Avatar
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    Default Re: Tipping Out

    ya Melonie I tend to cut straight to the chase. I actually have a ton of empathy with you guys, it's damn near criminal ( and maybe not just near) how the club owners conduct business. It seems to me that sooner or later that house of cards is gonna tumble. I wasn't aware of the law in Cali but I know here in GA and most other places it isn't like that at all, tipouts are mandatory and they can easily exceed what a girl makes for herself. All the while the club runs with only rent and utilities as overhead. Pretty fucked up if'n ya ask me.

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    Banned Melonie's Avatar
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    Default Re: Tipping Out

    I agree Mike. Manhattan is the recordholder for the highest stage fees in the USA ( $200 per shift, not including another $75-$100 in tipouts). If a girl has a bad night she can literally walk out of the club after working 8 hours with less money than she walked in with. But the flip side is that on other nights she can walk out with four figures AFTER paying the stage fee and tipouts. I know the same is true in Atlanta clubs, or at least the 'upscale' ones like Cheetah 3. I just look at it from a net profit standpoint, and don't get hung up on how much cash I'm required to fork over to the club for the "privilege" of dancing that night.

    Also, speaking of Atlanta clubowners and "criminal" in the same sentence isn't the least bit out of line considering last year's high profile fiasco with the Gold Club. New York clubowners aren't much different, but they DO know how to keep it out of the headlines !

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    Member MikeSouth's Avatar
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    Default Re: Tipping Out

    Ya they do but then so do some of the owners here. Galardi comes to mind. The difference is that Kaplan (who owned The Gold Club) got OVERLY greedy and allowed or mandated some REALLY stupid shit to happen...power corrupts and absolute power corrupts absolutely.

    Don't lose hope though, there's some good guys out there.

  7. #7
    Pamela
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    Default Re: Tipping Out

    Oh i guess Scores is going to be a real blast then.
    I am going in August for a week if all goes well, and did plan on dancing.

    Does anyone here work Scores August 16th - 23rd ?

    Would be nice to meet up with someone....
    Pamela

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    God/dess Lena's Avatar
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    Default Re: Tipping Out


    Mike,

    If it ain't broke, don't fix it.

    My accountant said there was no problem with me claiming more that six hundred dollar tipouts to some people without having filed 1099's on them.

    I think the high tipouts and house fee's do have thier place... for one thing, they keep out the girls who consistantly can't make house fee, which cuts down on competition and chaos. For another thing, it's karma - good tippers make more money and then tip better and then make more money.

    I also adopt Melonie's polocy of net profit and not worrying about the specific amount of the payout.

    Lena



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    Default Re: Tipping Out

    ya Melonie I tend to cut straight to the chase. I actually have a ton of empathy with you guys, it's damn near criminal ( and maybe not just near) how the club owners conduct business.
    "Some" club owner's would be an accurate statement. Lumping all club owner's together is not only inaccurate but unfair and uneducated. My girl's pay a fair tipout and they get more then there money's worth from me. The fact that you assume that club owner's have to pay a meager rent and utility payment and that is all, is foolish. There's insurance, advertising, security, equipment upgrade's and repair's and maintaining the stage and club's aesthetic's. Shit I pay $1500 a year just for the right to play music in the club ( ASCAP, BMI, SESAC ) . As for the moneys paid to me by the girl's, I account for every dime of it on my taxes as I do all money I make, so if they where to give me 1099's then they would be totally accounted for, yet about 50% of dancer's actually file taxes which is where anonymity
    is so important in the place's where dancer's don't get paid a wage. I would assume that I easily speak for about 50% of the owner's in the industry, we just aint the big boy's with the big club's that are in the news all the time. I'm just an honest guy trying to make an honest living and doing it in a clean and fun club that my girl's are happy to work in.

  10. #10
    Member MikeSouth's Avatar
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    Default Re: Tipping Out

    yer right It hate to generalize and thats what I did. On the other hand most of what i wrote is across the board correct. The whole idea of the girls paying the DJ and the house mom atc is likely to crash if the IRS ever sets its sites on club owners Sure you have overhead but you also serve draft beer that prolly costs ya 10 cents a glass and you make a couple of bucks a glass...not saying thats bad...it aint God Bless capitalism and overhead is a cost of doing business...subsidizing it on the efforts of the dancers is prolly gonna get someone in hot water someday

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    Default Re: Tipping Out

    Ok but let's look at this in another light, Exotic dancer's perform a service, they serve entertainment to customer's, am I correct ?? When I take my car down town to be repaired the shop perform's a service for me also, I don't give the mechanic any money, I pay the boss. He pay's the mechanic based on his performance. Yeah I may pass him a tip but it's rare at that. So let's say I pay my dancer's a salery based on there performance. They are expected to dance, work a full time schedule, and do lap dance's and vip's, all required and part of there job discription. I can now impliment quota's and minimum fullfilment expectation's and hire, fire or manipulate pay in accordance with there personal performance. Starting to sound like a job yet ?? These are not realistic guildline's for a dancer to work under and probably never will be only because it's not a widely accepted practice. If it was made to be the norm to pay a wage to performer's, this I'm affraid would be a little more common to expect. Dancer's are independent contracter's they come and go as they please. They do ( within reason ) what they want, when they want and with and for whom they want. They earn every dime they make and rightfully so. I keep there work environment clean, safe and repaired. I do all this for $8 a girl and $5 a lap dance. If I didn't recieve a cut from them then I would make far less then most of the girl's do and if it wasn't profitable for me then they would have no place to work. I might also add that I own a juice bar and make very little if anything off anything but my door and show.

    Oh and by the way, I eat out 4 night's a week and tip my waitress $5 a meal. So $20 x 52 = $1040 ( 1040 how ironic while talking about taxes ). I would never consider giving her a 1099 ???

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    Member MikeSouth's Avatar
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    Default Re: Tipping Out

    ya but the mechanic doesn't pay the guy that cleans the bays outta his salary waitresses dont pay the cooks, yada yada ...besides ya dont have to splain it all to me...I aint the one gonna come audit your books and question it...and maybe nobody is....I reckon thats why ya got lawyers


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    Default Re: Tipping Out

    I lost any point you where trying to make in that last comment ???

    One more time ..... I own a club , in my club I employ a staff. Me and my club and staff are at the disposal of the " independent contractor's ". They ( the independent contractor's ) are customarily required to tip the staff for the service they receive from them. IE, I pay a DJ to play music, the dancer tip's the DJ to play "her" music for her and to promote her while doing so.

    This is done much like you would tip a waitress who serve's you food or drink. Now if a waitress doesn't claim all of her tip's, does that liability fall on the shoulder's of the restaurant owner's and will it effect them in an audit ? Hell no !!!!

    As for tipout's being fair and reasonable, that is a question only the dancer's can answer. They choose to work in these club's and if the tipout was unfair then they can simply go to the next club down the road and work. I can only assume that club's with much higher tipout equate to much higher earning potential.

    Also I don't tip a waffle house waitress the same as I tip a waitress at The Top of The Riverfront, it's not customary. Although I tip a waffle house waitress about 20% it's still not the same as a waitress that serve's me a $75 meal with $15 a glass wine.

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    Default Re: Tipping Out


    The mechanic isn't paid by the customer. If he was, he probably would tip his clean up guy.

    Waitresses tip their busboys, hostesses, dishwashers, etc. Often they are required to tip out a certain percentage of their net. When I bartended, I had to tip my bar back, etc. Any tip driven industry is going to be tip driven.

    Lena



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