Bluefield Daily Telegraph, Bluefield, WV

January 21, 2013

Jobs done as hobby still require licenses in Va

DAVID RESS,The Roanoke Times TAD DICKENS,The Roanoke Times
Associated Press

ROANOKE, Va. (AP) — Roanoke-based guitarist Bob Casey plays a lot of music, but he had never considered it to be more than anything but a glorified hobby.

Occasional gigs put money in his pocket during his years at Virginia Western Community College. After he started working at Verizon's central office about 13 years ago, he kept playing. But he never thought that he had a business.

Turns out, he does.

About a month ago, he received a bill for two years of Roanoke business license fees, including a bill for delinquency. It added up to $124. Then he received a bill for a 2013 business license, along with a worksheet for him to declare the tools of his trade -- guitars, amps and the like. He is still calculating that one.

For Casey, the first-time notices were "a downer." But he paid it all.

"I just figured, I'm not going to fight this. They're right. It is a business," Casey said. "But it does take the joy out of it."

He added: "I don't think this is a 'woe is me' story. It's really a 'Whoa, how did this happen?'"

Musicians, handyman businesses, part-time landscapers and even people who make money officiating sports are among those regularly surprised by the business license law, officials in Roanoke and Roanoke County said. "I think in most cases, it's just that people simply don't realize they need to get a license," said Jerome Hoer, master deputy commissioner in Roanoke County.

The notices are out now because the commissioner of the revenue's office has been running through the annual dump of business income filings it receives yearly from the Virginia Department of Taxation, said Patrick Woods, business license inspector/auditor for Roanoke.

"I've been here for 15 years and we were doing this back then," Woods said. "Every commissioner of the revenue in Virginia is doing the same thing."

People who have a business on the side, or even as a hobby, often don't realize that Virginia law requires them to get a business license. There are a few exceptions, but if you make money by regularly selling goods or providing a service, the state considers you to be a business that needs a local license. That doesn't apply to isolated or irregular dealings, though.

Filing a tax return or supplemental document that is required only of businesses is a key test of whether someone needs to get a local business license.

And that generally means the Schedule C form the Internal Revenue Service requires when reporting a profit or loss from a business, Woods said.

Casey is a member of Le Hot Club de Big Lick, an act that pays tribute to the gypsy jazz of such artists as guitarist Django Reinhardt and violinist Stephane Grappelli. A couple of years back, the band got itself listed in the Virginia Commission for the Arts' touring directory. It led to a lot of gigs, and more money than Casey had previously made playing.

He has since then received 1099 forms for his work with Le Hot Club, then filed Schedule C (form 1040) documents to report his expenses. He said he thinks that combination brought him to the city's attention.

He wrote off some minor equipment expenses and mileage, and claimed part of his dining room -- where Le Hot Club rehearses -- as a deduction.

"I think that's what really threw up the red flag, using square footage of my house for my little rehearsal business space," he said. "I guess realistically, I am a business, because I get paid. But I'm just such a small fish in a small pond in a small valley."

Taxpayers have to file copies of their federal returns with the state. The state taxation department in turn makes a record of all Schedule C filings and sends them to commissioners of the revenue. The commissioners' offices then check the names on those filings against their own databases of license-holders. One of the first jobs is to check where the business actually is located, Hoer said.

"A lot of times, we'll have a name of someone who lives in Roanoke County, but the business is in Roanoke city," he said. Sometimes, business owners have paid the license but forgotten to update their addresses. Sometimes, the business owner reported income from a limited liability company or partnership that already paid the license.

Sometimes, though, people simply don't realize they needed a license.

"If you mow some lawns or you have a hobby that makes you some money, you might not think you're a business," Hoer said. But if you report that money to the IRS, as you're supposed to, then you are.

That can bring a surprising business lesson.

It's a lesson that Casey, and others who declined to speak for the record, have quickly learned.

"The tax isn't that much on my instruments," Casey said. "But anything I buy now to improve my gear is going to go onto Schedule C, which the city is going to see eventually and say well, you show this gear, now you have to pay taxes on this gear forever, (or) till you sell it. So I don't see myself upgrading anything."

Given the choice to do it over, he said he still would want his band on the arts commission touring list.

"We play some really cool gigs, like a high school, middle school auditorium full of kids," he said. "We're introducing them to Django. They've never heard of this guy. They've never heard the music. I love that."

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Who needs a business license in Roanoke? Anyone operating a business in the city of Roanoke, even what amounts to a hobby business that doesn't produce much money.

Licenses must be renewed annually on or before March 1. The city levies various rates depending upon the type of business and the amount of revenue.

New businesses should contact the Roanoke commissioner of the revenue's office for more information, 853-2524, or revenue(at)roanokeva.gov. More details are available on the city's website, www.roanokeva.gov.

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