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Talking with the taxman about poetry — and deductions

The couple, who were the subject of the 2004 documentary “Venus of Mars,” say the state is auditing their Schedule C deductions.

Lynette Reini-Grandell and Venus DeMars find themselves in the middle of an arduous and perplexing audit.
MinnPost photo by Jim Walsh

“Talking With The Taxman About Poetry” is the whimsically named 1986 album by Billy Bragg and 1926 poem by Russian and Soviet poet Vladimir Vladimirovichbut there’s nothing whimsical about the wringer that Venus DeMars and Lynette Reini-Grandell have been put through since November, when the couple received a letter from the Minnesota Department of Revenue notifying them that their income-tax filings from Jan. 1, 2009, through Dec. 31, 2011, are being audited.

The married couple, who were the subject of the 2004 documentary “Venus of Mars,” say the state is auditing their Schedule C deductions (the couple file as a married couple, but file separate Schedule C forms) and will demand payment of back taxes upwards of $100,000 – all due to the state’s specious definition of what constitutes professional artist and musician status.

“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,” said Venus, a visual artist, songwriter, bandleader and performer. “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.”

“They’re arguing that we’re not intending to make a profit on art, that we’re just pretending to be artists so we can indulge in our hobbies and go on vacations,” said Reini-Grandell, a poet and English professor at Normandale Community College who co-hosts KFAI-FM’S Write-On! Radio. “That’s why they don’t want us to be able to subtract any expenses from our profits. They want us to pay back, with penalties and interest, the refunds we’ve gotten previously. Also, they seem to have put a ton of time into our case. They must be thinking they will make a lot of money from this somehow.”

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In honor of National Poetry Month, MinnPost sat down for interviews via email and in-person with DeMars and Reini-Grandell to talk about the taxman and poetry.

MinnPost: Did you see this coming?

Lynette Reini-Grandell: No. We were a little nervous about it because we knew it would involve searching through a lot of files for a lot of small bits of paper, many of which are thermal receipts that are barely readable when they’re less than a year old. We contacted our accountant immediately. We’ve been using the same one since the mid-1990s. We had been doing our own taxes up to that point and were afraid of making errors, so we hardly wrote anything off. A colleague recommended our accountant. He was very pleasant, helpful, and very clear about what we could and couldn’t write off. He assured us that although it would be time-consuming, it would all be fine in the end. Part of his contract with clients is to represent them in case of an audit, so this came with what we’d already paid for all those years. He told us how to assemble the receipts, and said that it’s common for the accountant to meet with the auditor and go over the receipts without the clients present. That sounded like an efficient and less stressful way of doing things, so we said yes and gave him power of attorney to do that.

Venus DeMars: Let me state first that I am not at all upset by being audited. I get it. What I’m upset with is the way this audit has gone. It’s been as if the auditor never intended to listen to us at all. As if the Minnesota Department of Revenue had already decided, and only used the audit interview process to collect up additional statements from us so they could turn what we said in such a way as to support their already decided determination on us. It’s not been any sort of normal audit, ever, at any point in the process.

MP: What are your options? Set up a payment plan? Fight it in court? Where is it all at, now?

Reini-Grandell: We’ve got one more meeting that needs to be scheduled the first week of May, and we have no confidence that the Department of Revenue will listen to us or our accountant or look at our evidence. So we’ve retained a lawyer at considerable cost who will represent us at that meeting. We are anticipating the worst. If they decide against us, then it goes to Appeals Court and we have to pay the lawyers a lot more money. And it’s apparently a very slow process, so the stress will continue. I don’t know about payment plans. We don’t even have $100,000 equity in our house, and we’ve been here slightly over 25 years.

MP: Venus, you told me the other day that you’re obviously being made an example of. Why would that be? Why you, and what message is the State of Minnesota sending the rest of us if they nail you?

DeMars: I don’t have a clue, but I have theories. As our accountant told me the other day over the phone, “I don’t know who you pissed off over there, but …” Yeah. They’re throwing the book at us, and with assertions that make absolutely no sense in the music world. Things like the fact that I’d ‘allowed’ – their words – my music to be played on The Current as an example that I’m not interested in making a profit. The Current, they say, is part of Minnesota Public Radio, and MPR, they say, doesn’t pay royalties. A songwriter can only get royalties if they’re associated with a registered publisher, which I have been (with ASCAP) since 1996. I publish my own work so they can pay me. I am set up for being paid royalties. If I was really not interested in making any profit, why would I have done that?

They also really don’t like that I tour. They say I tour way too much and that really, my name is already out there enough, after all this time in the business, there is now no need to do any promotional touring. I have this statement in writing. I attempted to show them, and tell them that this was the industry standard, approved, well-documented, way to build one’s fan base, to expand on it, to inspire interest in one’s work because of the direct contact one has with an audience. They replied that there’s no reason to return to the same cities and venues, and that I’m wrong, that I’m really touring only for pleasure and recreational reasons.

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Touring is hard [bleeping] work, and I think they know it. They’re just trying to misrepresent me, so they can dissolve my business and collect back taxes which they can say I deducted wrongly because if they win, they can say I was never running a business. And I’m an easy target. I’m an artist. Artists are easy targets.

I’ve spent a lot on my career, I’ve financed it with credit cards because I was transgender and out in the early days, and way too controversial for others to feel comfortable in investing in me. I invested a great deal, and I still owe a large amount of credit debt. We’re not rich people who pretend to run a vanity business, finance it out of their large savings resources, and claim deductions on everything so they can avoid paying taxes. I’ve sweat blood to keep my art going because people tell me how important it is to them. And because, yes, it’s my calling.

They’re trying to go after the easiest targets, the ones who can’t afford to fight, the ones who have had a hard struggle and which is reflected on their tax returns. So they can build an easy case. So they can win. So they can claim money. So they can maybe then say, “Look at all these artists, these government freeloaders. Why are we supporting these tax abusers?” That’s why they’re making an example of me by this audit.

MP: What is the taxman’s definition of success?

DeMars: The tax guy said that by this point in my career I needed to be signed by a major label, that I should have been signed to a major label by now, that I needed to be signed to a major label to establish myself. [He said that] there was no evidence that I was actively sending my records to major record labels, so therefore I must not be interested in profit, and not running a for-profit business. I told him that as an independent artist I get 100 percent of all records sold, and that I intend to run my own label, and stay independent.

Now he says I have not promoted myself in any way that is appropriate enough to result in any substantial sales as an artist, and that there is no documentation that I ever self-promoted myself. I [offered up] a bag of magazine articles spanning those 10 years, and prints of reviews and previews, my Playboy magazine interview, my U.K. Powerplay Music Magazine three-page feature after we’d first toured England. Tons of documents about how effective I’d been with self-promotion. This was at the very start of the first meeting. When I was taking these documents out of the bag, he stopped me and said, and I’ll quote him as close as I can: “I know, I know. Big transgender rock star. I’ve seen all your videos online. Very talented. I’m over it! I don’t need any of that. I’m a numbers guy. Let’s talk numbers.”

MP: How has it been, dealing with the taxman? Has he been pleasant, ornery, professional, sympathetic, what?

Reini-Grandell: He has behaved pleasantly at the beginnings of meetings, but I think he has been just pretending to be friendly. I found it a little creepy that one of the first things he said to me was that he wondered what kind of an English professor I was and looked me up on RateMyProfessor.com. He said things like Venus should have just given up his artistic career because after all that time it clearly wasn’t going anywhere. The written materials we have gotten after the meetings, questions, conclusions, etc., seem like negative propaganda. Also, I contacted the Taxpayer Rights Advocate and once she looked me up in their database, she pretty much told me to give up. She seemed like an advocate for the Department of Revenue, not the taxpayer.

MP: From what you’ve learned from this experience, has this been going on for a while? Has the government always been in the business of determining what, exactly, entails who and who is not a professional musician, poet, or artist?

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Reini-Grandell: Our accountant has said he’s never seen anything like this, but a few of our friends in the literary world have heard that artists are getting audited more by the state of Minnesota, not the IRS. They are hearing this from each other and also from their accountants. One acquaintance was advised to not fill out a Schedule C [form] with a loss because it might attract attention. Some people in my circle of friends think that people who have gotten Arts Board grants are getting targeted for audits. I personally am beginning to think it’s part of an attempt by one branch of the state government to discredit arts spending and take back the Legacy money

It would be interesting to see if they are doing this to the other areas funded by Legacy money.

MP: What is your definition of a working professional musician?

DeMars: A working musician is someone willing to go the distance despite crud, to keep putting out music in a polished, or at least well-received way, that a fan base buys. If we go into what defines a business, the government’s already done that. It’s someone working in a manner through an owned business with intent to profit.

MP: What is the taxman’s definition of a working professional musician?

DeMars: I’m actually not at all sure. I can’t make heads or tails of him. He, or someone above him, is acting like there’s some sort of vendetta. Like I’m some sort of ‘enemy of the state’ that they’ve just got to take down.

MP: You’ve had a crash-course in tax law and the arts. As you’ve been going along in this process, are there any similar tax law-artist stories that have reminded you of your case?

Reini-Grandell: Kafka’s “The Trial.” It’s been distracting and depressing, in a clinical-depression way. We feel like we’ve been forced to justify our right to exist. We really didn’t have a Christmas. We both feel as if we’ve been in hell since November, and there doesn’t seem to be any end to it. I’ve hardly been able to create anything or send out anything for publication. I’ve had to give up on a lot of stuff, and I’ve been a really crappy teacher this semester because I can’t sleep.

At the second meeting, I really felt as if Venus might still have problems, but my case was totally solid. I’d made a profit as a poet in one of the three years they were auditing, so I didn’t even fit their definition of what might flag concern. I had just had a poem nominated for a Pushcart Prize

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I was wrong. Their assessment of my income boost from the State Arts Board grant for poetry in the April 15, 2013 determination was, “The profit in 2011 is not the result of commercial activity. There was no documentation provided that could substantiate that relying on grant income is a viable business strategy.”

The tone of all these proceedings have been completely anti-art. There has been an emphasis on creating a product, advertising it for sale, and then selling it. That’s not how it works on the creative end of literature. Writers need to spend a long time writing, getting feedback, moving up the levels of critique, and then they participate in the publishing industry by sending things out to publishers. One tries for the prominent ones first, gets rejected many, many times, and eventually finds a press and an audience.

Writers do not write a few lines and then advertise they have a poem for sale, making sure that the poem sells at a break-even point of what it cost monetarily to produce it. But this is what the Minnesota Department of Revenue insists I should be doing. It sickens me to have to participate in this because I know it is deeply wrong.

Art is spiritual. However, we all live in a capitalistic society. I can’t buy a loaf of bread with a poem. So we try to come up with ways of making the two worlds articulate with each other so art continues to be art, and nobody has to starve just because they are creating something “priceless.”

The flipside of this is that we also feel funny paying for art, because it seems spiritual, and seems like it should be free. How motivated are you to put money in the collection plate at a church? You’re probably even offended by being reminded of money when you’re feeling all pleasant and spiritual. But the building needs to be maintained, and the staff needs to be given a living wage. So people get paid for making art, sometimes – not as often as they should. By the way, I feel that teaching is also spiritual and undervalued in this culture. Lucky me.

MP: How has this made you feel? You’re both very sensitive artists and people who’ve chosen a path and work that makes sense to you, adds beauty and meaning to the world, you don’t hurt anyone, you give back to the community, you constantly do gigs – benefits and otherwise – and radio for free. Do you feel like criminals, and if so, how does it feel to have your government make you feel like criminals?

Reini-Grandell: Yes, it feels horrible. I’m one of those goody-two-shoes who has always tried to do things right. That’s why we’ve used an accountant for so long. This has been mortifying – for a long time I didn’t want to tell anyone it was happening because the presumption from the general public’s perspective is that you got caught trying to pull a fast one on the government.

But the stress from this has been affecting my work as a teacher, so I’ve begun to tell my colleagues who need some kind of explanation as to why I have no time or energy to do the things I usually do. I’ve really been trying to get a poetry manuscript published, and I think the stress from this has fried my brain so much that I’m just not able to edit and send things out the way I need to, so I’m trying to mentally prepare myself for how to deal with that.

I recently saw a panel on trauma and literature – the idea was that writing about your own trauma could make good literature – and I thought, “What the hell, I feel traumatized, but how can I write a poem about persecution by [former governor Tim] Pawlenty appointees? How can I write a poem about feeling no good as an artist?”

DeMars: Just so it’s on the record, I have been willing to do benefits, for free, when it’s something I truly believe in. I’ve done benefits to help pay medical costs for friends of mine, for example. But, to be exact in a tax audit way, I don’t go out of my way to do these. I try to make a profit. And now I feel awful icky for even having to say that. But yes, I try and keep doing things for free down to just the things I really believe in. But I believe I am a very generous, kind person, and I’ve always tried to live my life in an honest, open way, and I’ve tried to help whenever I can, and to try to make life a better place for all of us. Everywhere. I do this with my art, my music, when I write my lyrics, when I form the words, when I push them from my mouth with a kind of emotion that sometimes can cause me to become transported. Like I’m gone. Like I’m somewhere else. Like I’ve dissolved into nothingness, and everything all at once. I do feel passionate in pursuing my art. Does that all make me a criminal? Hmm. Gotta think on that one.