A judge has tossed Albemarle County’s request to dismiss a lawsuit claiming that the county is unconstitutionally charging novelists taxes.
Judge Claude Worrell dismissed the county’s request after a hearing in Albemarle County Circuit Court on Wednesday.
John Hart is suing the county and Corban Addison Klug is suing Charlottesville, claiming that both localities are unconstitutionally discriminating between different types of speech by taxing freelance writers and not traditional media.
Virginia code prohibits local governments from imposing a license fee or tax for the “printing or publishing” of “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 on radio or television broadcasting stations.
Hart also argues that the code is too vague and should be struck down.
“If an ordinary person looks at that … it is at best confusing,” said Renee Flaherty, who is representing both writers.
Worrell spent most of Wednesday’s hearing grilling Assistant County Attorney Anthony Bessette about the applicability of Albemarle’s tax rules.
In the county, 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 the type of business.
Hart was 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.
Worrell focused on those categories in his questioning, positing that they don’t specify writing or production of “intellectual property” and therefore Hart might be free from taxation if his business doesn’t fall in any certain classification.
“If it doesn’t fit into that ‘other services,’ there’s no tax rate that applies to that,” Worrell said. “Isn’t that why the plaintiff says [the code] is vague?”
While Worrell spent much of the hearing by grilling Brissette, he didn’t let Flaherty off the hook.
Worrell said that the county is not targeting Hart for his free speech, but is actually acting constitutionally. He said if Hart hadn’t filed his taxes under a business designation, the lawsuit may not have even been necessary.
“They haven’t said what he can say or can’t say. Everything they’ve done is content neutral,” he said. “Mr. Hart isn’t being discriminated against because he’s a producer of speech. He’s being taxed because he has a business.”
In 2016, Albemarle began its “Schedule C initiative,” in which the county contacted people who filed Schedule C business tax forms to the IRS, telling them that they are required to acquire a business license.
Between July 1, 2016 and Dec. 6, 2016, the county collected nearly $500,000 with the initiative.
Hart, who has authored six novels, has said he has been assessed a tax of $10,995.50, which includes $2,178.94 in penalties and interest.
Albemarle County has until Jan. 13 to file a formal response to Hart’s lawsuit.
Klug, who has authored four novels under the name “Corban Addison,” is making a similar argument in the city.
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.
Last month, a judge ruled that Klug hadn’t served the lawsuit to City Attorney John Blair, and therefore the court didn’t have jurisdiction over the city in this case. A hearing on the city’s motion to dismiss the lawsuit is scheduled for Dec. 18.
Klug and Hart are asking for refunds of their business license tax, penalties and fees; entries of judgement declaring that the application of the business license ordinance violates the First Amendment and that it’s unconstitutionally vague under the Fourteenth Amendment; costs and expenses; and further relief.