The first time I spoke with Venus DeMars, an artist and musician from Minnesota, she called after midnight from her sister’s backyard up on the north shore. I wanted to talk to her about an audit she was going through with the state tax authorities; I had heard it was something more than a simple mismatch between receipts. She called me late, after playing a concert, and told me her story — out of breath, pacing in the dark. At the end of our conversation I posed a question: Isn’t the worst-case scenario here just a change in tax status, maybe a little bit of money to pay back? What does it matter?
Her voice caught. “It feels like it’s discrediting me as a person,” she said, “and just throwing my twenty-year career out the window. Saying, ‘you were just playing the whole time.’ You put your heart and soul out on the line because that’s what touches people. And then they tell you that everything you’re doing is just pretend. It can crush you.”
Since late 2012 DeMars has been the subject of an audit by the Minnesota Department of Revenue. DeMars is an artist and, since she makes money from her artwork, she’s a small businessperson. She doesn’t hold a day job and made about $30,000 last year selling artwork and concert tickets, and sometimes receiving grants for her performance work. For more than a decade she has worked with an accountant to file a Schedule C each year with her tax return. With a Schedule C, she and the twenty-three million other self-employed workers in this country are able to write off business expenses — everything from tubes of paint to record sleeves — and for many, those deductions make doing business possible.
When I went to visit her, DeMars invited me to the home in south Minneapolis that she bought in 1986 with her wife, Lynette Reini-Grandell, a poet and college professor. Inside, a bright porch opens to a richly colored home. Out back a carriage house shelters enormous in-progress paintings and a tour van. The Venus DeMars I met that day was a soft-spoken woman screened by lush greenery on her front porch, sitting amid a pile of receipts and creating a detailed spreadsheet like nothing I’ve ever seen. A few days later I said goodnight to another Venus DeMars, a slim fifty-three-year old recovering from the heart surgery he underwent two weeks earlier, wearily heading down to the basement to knock out a half-hour’s rehab on the treadmill, accompanied by her loving wife of more than thirty years on the exercise bike. Another night, DeMars stood alone with a guitar and tight black jeans at the front of a low-ceilinged room, filled the space with her voice, and brought her audience to tears.
DeMars came out as trans twenty years ago, and has lived between genders since. She wears heavy eyeliner and her hair is dyed in a two-tone homage to Cruella de Vil, but these are the only direct nods to her outsize stage persona as the leader of All the Pretty Horses, the genderqueer glam-punk band she has fronted for the past twenty years. Onstage, she wails and growls, all leather and taped-up nipples, and she is most often photographed with sparks flying from the grinder she jams against her metal codpiece. We sat on her front porch that first day and snacked on nuts while we talked.
Venus DeMars performs “Heroes.”
DeMars, like most artists, has had a range of jobs over the years — design work at a T-shirt business, some landscaping – but hasn’t held a traditional day job since 1996. She’s best known for her music, but is also a respected filmmaker and performance artist who shows and sells paintings and drawings. She has been awarded the big grants that local artists aim for, and while I’m in town I ask around — everyone in the arts community knows who she is, knows about the audit, and has a strongly held opinion. Many of them are terrified on their own behalf. If this can happen to Venus, what about them?
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The IRS does not publish any data on the number of artists filing a Schedule C or the proportion that are audited annually. According to the Census Bureau, one-third of the two million artists in the United States are self-employed; they make up, then, a small proportion of the country’s Schedule C filers, all of whom are at a relatively high risk of audit each year, according to several accountants I spoke with. DeMars and her wife file their taxes jointly, and they both file Schedule Cs: DeMars as an artist, Reini-Grandell as a poet. They keep their receipts and they follow the law as closely as they can.
When DeMars and Reini-Grandell found out they were being audited by the state of Minnesota for the tax years 2009 through 2011, they thought they might have inadvertently missed a small payment or expense. Getting audited is a pain, but it’s part of doing business; DeMars initially compared it to being called in for jury duty.
“We thought it was just, assemble your receipts, and make sure the math works,” says Reini-Grandell, and laughs. She takes a breath and tells me that they found some receipts they’d missed when they did their taxes, and thought they might actually come out ahead and get a little refund. She laughs again, more bitterly this time, and shakes her head: “That was incredibly naïve.” She and DeMars spent a few months gathering receipts and other paperwork in the evenings, signed over their power of attorney to their accountant, and sent him to a meeting with the auditor.
John Marg-Patton is the couple’s accountant. He said that, after some explanation, the auditor seemed to understand how both DeMars and Reini-Grandell’s businesses worked, and he expected to get a call within a few weeks, maybe to quibble over $200 here or there. Maybe there was a credit card receipt for gas where the name of the town couldn’t be read. Nothing out of the ordinary.
The auditor called Marg-Patton and asked for another meeting. He wanted some clarification on each of the businesses. Marg-Patton asked DeMars and Reini-Grandell to come in and explain what they do, so they packed up boxes stuffed with evidence of their long careers: magazine articles, reviews, publications, posters and records. The four of them met in the Department of Revenue’s offices. DeMars still has these boxes, and a quick scan of their contents suggests a well-documented independent career in the arts — reviews of her music in foreign-language publications, professionally designed posters from two decades of tours, hard copies of albums, invitations to exhibition openings and contracts.
The auditor didn’t want to see any of it. The meeting didn’t go as smoothly as they’d hoped. DeMars tried to show the auditor articles about her, even some international coverage, but he wasn’t interested. “I started showing him all of the magazines, and he looks and goes, ‘I don’t need that. I know, I know, big transgender rock star. I’m a suburban white guy, I’m over it. I’m a numbers guy, let’s talk numbers.’” Even Marg-Patton told me he was surprised that the auditor had, as he put it, “done quite a bit of lookup on the computer. No auditor that I know of ever talks about doing research on people they’re auditing.”
The auditor told Reini-Grandell that he’d looked her up on ratemyprofessors.com. The site encourages students to rate professors on their looks as well as their teaching — “Is your professor hot? Hot professors get a red chili pepper”— and the tone of the ratings is often juvenile and can skew towards the disgruntled. She was horrified, and the meeting was difficult for both of them. But they came out of it satisfied that the auditor now understood how their businesses worked, and they were confident that the numbers would shake out.
Artists are especially vulnerable to the ambiguous requirements of the tax authorities — the guidelines published by the IRS and used by the Minnesota Department of Revenue (and in other states) dictate that “an activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit.” Motives and intentions are tough to prove. Artists have an especially hard time showing that the primary purpose of their activities is income, since generations of artists have been taught to act as though they make art for love, not money. This distance from filthy lucre is a normal part of the pose of the professional artist.
The auditor called and asked for another meeting; he said a couple of things still weren’t clear, and he needed to understand the businesses better. DeMars and Reini-Grandell came in for a second meeting. Reini-Grandell, whose primary income comes from her work as a professor (a position closely tied to her poetry practice), went through her records to find copies of all of her rejection letters from literary journals. She had to show that she was trying to make money from her poetry — and that she was failing. Businesses don’t always succeed right away; the point, it seems, is to try, to have a “profit motive,” in the words of the Department of Revenue. So when you go into your meeting with an auditor, you might have to explain how many more times you’ve tried and failed, to recount the rejections that never made it to paper. “To demonstrate that I had been trying, and getting rejected, for a long period of time,” as Reini-Grandell put it. I don’t stifle a shocked bark of a laugh, and she laughs too: “I know. We can laugh now, we can laugh now. Yeah. When you’re in the middle of it, it just…well.”
The IRS does circulate nine “factors” they consider when determining whether a given taxpayer should classify their activities as a hobby or a business. Tax attorneys and CPAs know they move in a vast grey area with ample room for prejudice when they try to navigate these guidelines: The factors include “whether you carry on the activity in a businesslike manner” and “whether the time and effort you put into the activity indicate you intend to make it profitable.”
DeMars and Reini-Grandell both received preliminary determinations from the state, reclassifying them as hobbyists rather than self-employed artists. That meant they could no longer file as self-employed or deduct expenses, and owed thousands of dollars in back taxes, penalties, and interest. In nine points, the state outlined its argument against each of them. Reini-Grandell had just won a large grant — a realistic source of income in Minnesota, with its highly developed nonprofit arts landscape — but the auditor stated she had not shown that “relying on grant income is a viable business strategy.” The auditor criticized DeMars for using the same credit card for personal and business expenses, and was not pleased that she didn’t have a written business plan, insisting “there was no documentation provided that indicated any formal business analysis was conducted.”
DeMars had lugged posters, advertisements, and published reviews to her meetings with the auditor — that box of materials he wouldn’t look at, saying he was just a “numbers guy,” yet the determination reads: “There was no documentation provided that the taxpayer promoted his ‘tours.’” It continues: “There was no oral or written testimony provided to indicate the taxpayer had his music, or art, evaluated by talent professionals.” The auditor referred to DeMars’s commissioned mural and mosaic work not as a part of her artistic practice but as “freelance construction activity.”
One section of DeMars’s determination reads, “The presence of personal motives in carrying on of an activity may indicate that the activity is not engaged in for profit.” Underneath, bullet points outline evidence against her. In just a few words, the auditor’s letter calls into question a centuries-old understanding of art as an expression of the artist’s soul. He recasts an aesthetic choice (and savvy brand-building strategy) as a black mark on DeMars’s record. The first point reads simply: “The music and art are self-created by the taxpayer and based on his life experience and perspective, and are intensely personal.” The exact same dismissal was cut-and-pasted into Reini-Grandell’s determination: “The poetry created by the taxpayer is based on her life experience and perspective, and is intensely personal.”
Marg-Patton received the determinations first, and read them over the telephone to DeMars, who paced back and forth as she fumed. She asked Marg-Patton if they should get a lawyer. He paused, then said he thought they probably should. “When he said yes, then I just felt, ‘oh my god, this is crazy.’ I always trusted the government. I always trusted the machine to do what it should.”
DeMars told me a story about when she was a boy with a mohawk back in Duluth. She ran down the street because she was late and was stopped by a police officer. He couldn’t believe she wasn’t up to no good, but she told him the truth — why she was running and where she was going — and he understood, and he let her go. She’s had a lifetime of run-ins with power, and in all of these instances other people’s individual discretion was at work. And she always told the truth, and everything always worked out. This time, she’s involved in a conflict that shouldn’t be about her personal qualities, but about marks on paper, numbers. And she doesn’t know how to think about the fact that the machine seems to be failing her.
DeMars and Reini-Grandell began to raise money to hire a lawyer — they set up an escrow account and asked for donations from the local arts community via PayPal, and quickly raised a few thousand dollars. They had another meeting with the Department of Revenue, this time in their lawyer’s office. The auditor wouldn’t shake their hands. Reini-Grandell told me he suddenly had a nervous tic in his jaw; DeMars said he was furious, shaking, yelling, and she was scared. “To see his reaction at the last meeting…you don’t want to feel that way with your government. Your government is supposed to be there, supposed to have your back, you know?”
DeMars and Reini-Grandell were offered the chance to settle with the department for pennies on the dollar, but they declined, as they both would have lost the ability to file as self-employed. DeMars told me they had discussed the possibility beforehand, and had agreed not to settle; they saw the money they had already raised as a clear message from the arts community. “We’re fighting a fight that’s beyond us. We’re not stopping. I don’t want the arts community in Minnesota, or anywhere, to be so afraid to call themselves what they are.”
After the meeting, they received an official, final determination. The Department of Revenue decided to accept Reini-Grandell’s Schedule C as filed, reversing their preliminary determination, but they deemed DeMars a hobbyist.
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For a while after that, things were tough. After a blockage in an artery affectionately nicknamed “the widow maker” caused pain she could no longer ignore, DeMars underwent heart surgery while her lawyer began work on an administrative appeal. She and Reini-Grandell both struggled to work and to keep up the fight despite the emotional and financial costs, but rallied after a few months. Reini-Grandell got a contract for her first book, and DeMars mounted a performance piece, staged a solo exhibition of her drawings and has concert bookings out into late this year.
Without the support of the community, DeMars and Reini-Grandell would never have been able to fight; lawyer’s fees have reached $12,000 and continue to rise. Few working artists have those kinds of cash reserves on hand, or the decades of commitment to community that helped DeMars and Reini-Grandell raise money. When it comes to taxes — as with so many things — the ability to fight is for those who can afford it, as DeMars points out.
Reini-Grandell told me simply, in a low voice, “It would have been nice to not go through this.”
No one can tell if the content of DeMars’s work or her personality matters to the Department of Revenue. These people are Minnesotans, so there’s no hyperbole, no accusations. They say they can’t tell. But they bring it up out of nowhere, so they can probably tell.
“I don’t want to use the word ‘shocked,’ but basically I don’t understand the conclusion that the state got to, how they got to that,” says Marg-Patton. “And are there other outside things going on? Is somebody after him, or is it because Venus is Venus? There isn’t any evidence of that. But there isn’t any logical reason to me why they came to the conclusion they did — that his efforts are going to be considered a hobby.”
Reini-Grandell apologizes for indulging in her “little conspiracy theories” before suggesting that political actors might be attempting to delegitimize the state’s significant funding for the arts, that DeMars’s gender presentation might make some people uncomfortable, that her own position as the family breadwinner might be hard for some to understand. She then dismisses any suggestion of ill intent: “I don’t think it’s even conscious on their part. I think they just find our situation so unusual, it’s something they can’t get their head around. For an institution that you would think is based totally on numbers, it’s very emotional on their side, I think.”
I reached out to the Minnesota Department of Revenue for comment, but since they cannot comment on individual cases they sent me only official boilerplate: “Taxpayers expect the Department of Revenue to maintain the confidentiality of their information and we take that responsibility very seriously,” along with an anti-discrimination policy.
DeMars’s CV goes back to 1984, when she released her first album. She hasn’t always made a profit, and in some years she wrote off extensive losses and got by thanks in part to her wife’s income. She doesn’t hold a day job, works with her art more than full-time and made about thirty thousand dollars last year through her artwork. Yet the Department of Revenue ruled that she is a hobbyist. She and Reini-Grandell owed a total of $3,535 including interest and penalties; more importantly, DeMars could no longer claim her art practice as a business, or file a Schedule C as self-employed.
Sometimes the line between professional and amateur is a clear, bright one. But in the United States artists are, for the most part, just artists, moving in and out of day jobs and commercial work, employment and unemployment, windfall and drought: professional artist, serious artist, working artist, real artist. Around here, these are fighting words. They mean so much in part because we don’t agree — can’t agree — on what they mean. In fact, we prefer not to agree, and for our uncertainties we are rewarded with a rich and vibrant cultural life. There are no clear definitions, and absent the occasional obscenity or copyright trial there are no authorities to enforce the boundaries. The State Departments of Revenue and the Internal Revenue Service end up being, somehow, the only mechanisms the state has to determine an artist’s status with any finality. But they do it without the benefit of clear, transparent rules, and in the end it seems that agents audit people, not their receipts. It’s the auditor who decides: You’re an artist, or maybe you’re not. And as Venus told me the first time we spoke, “it can crush you.”
* * *
This spring, DeMars and her lawyer submitted a request for her auditor’s notes. After much back and forth, rather than giving them the notes they requested, the Department of Revenue asked them to come in for a meeting with a new auditor — to make a fresh start.
One month after that meeting — a year and a half after her audit began — DeMars received a notice in the mail. It read, in part:
“After reviewing all of the information available, it is our determination that the taxpayer’s art/music activity was engaged in for profit as defined under Treasury.”
At the back of the letter, she found a check for $70. The Department’s audit showed that DeMars was, after all, owed a small refund.
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April Malig is a cartoonist and illustrator who loves sad poetry and candy. @aprilangelica