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Charlottesville author's tax lawsuit hit snag

A lawsuit from a local author hit a setback in Charlottesville this month as another author’s virtually identical Albemarle County lawsuit languishes.

The lawsuits were filed in July 2019 on behalf of authors John Hart and Corban Addison Klug and claim that the city and county are unconstitutionally discriminating between different types of speech by taxing freelance writers and not traditional media.

Earlier this month, according to Daily Progress news partner NBC29, a judge ruled against a motion for summary judgment from Klug.

Per Virginia code, no locality can impose a license fee or levy any license tax “upon the privilege or right of printing or publishing any newspaper, magazine, newsletter or other publication issued daily or regularly at average intervals not exceeding three months, provided the publication’s subscription sales are exempt from state sales tax, or for the privilege or right of operating or conducting any radio or television broadcasting station or service.”

Charlottesville charges a $35 fee for a business license for businesses with $0 to $50,000 in gross receipts, a $50 fee for businesses with $50,000 to $100,000 in gross receipts and businesses with $100,000 or more in gross receipts are taxed based on type of business.

In Albemarle, businesses with gross receipts less than $100,000 pay a flat fee of $50. For businesses with gross receipts of $100,000 or more, the tax is based on type of business.

Both court filings for Klug and Hart state they were assessed the license tax of $0.36 per $100.00 of gross receipts, under the categories of “misc. business/personal service” and “repair, personal, business, and other services,” respectively.

Klug’s company, Regulus Books LLC, received an assessment from Charlottesville in 2018 for unpaid business license taxes dating back to 2015. Per court documents, Klug received a letter in July 2018 that he might be subject to the business license tax because “he included income from Regulus on Schedule C of his 2017 federal tax return under the category ‘Independent Artists, Writers and Performers.’”

Eventually, after responding to the commissioner’s request, Klug received an assessment for $2,177.22 for 2015-2018.

Klug has taken issue with the tax, which he argues has been “applied unevenly” to freelance writers.

In an August motion for summary judgment, counsel for Klug argued that Charlottesville’s business license violates the First Amendment because it taxes authors while excluding the press and that it was also unconstitutionally vague because it provides authors like Klug no notice that they’ll be subject to the tax.

“The undisputed facts show the city has shoehorned authors like Regulus into an unconstitutionally vague business-licensing regime that does not give them notice that they will be taxed,” the motion reads. “The undisputed facts also show that the city taxes writers like Regulus but not the institutional press, in violation of the First Amendment.”

According to the motion, the city lists more than 130 taxable occupations broken down into eight classes, none of which contain “freelance author.”

The city’s competing motion for summary judgment argues that its tax ordinance bears no implication on any sort of speech, “either content or speaker-based.”

“The city’s ordinance is an economic ordinance only for the privilege of conducting business within the city’s jurisdiction, with wide application to all professions and businesses that are not otherwise exempt,” the motion reads. “There is no method of singling out any particular speaker or content for taxation and because of its wide applicability, there are no First Amendment implications requiring heightened scrutiny.”

On October 2, the parties met in Charlottesville Circuit Court to argue their motions. Judge Claude Worrell ruled against Klug’s argument that the ordinance is applied unconstitutionally uneven, but has yet to rule on the argument about the ordinance being unconstitutionally vague, according to NB29.

“Charlottesville’s business license tax is vague about whether it applies to writers, but it’s not vague about the unconstitutional distinctions it makes among First Amendment speakers,” Attorney Renée Flaherty, who is representing Klug, said. “We are disappointed in the court’s ruling on the First Amendment claim, but we are optimistic that the court will rule in Regulus’s favor on the vagueness claim.”

According to Conor Beck, communications project manager for the Institute for Justice, Worrell said he would try to get the parties a ruling on the vagueness claim in the next few weeks. Beck said they may file an appeal, depending on the Worrell’s ruling.

Meanwhile, Hart’s virtually identical Albemarle County lawsuit has languished in the county’s circuit court for the last several months. The case remains active but no hearings have been scheduled since December 2019.


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