“Patriot’s” Comment Evokes Nostalgia for the Old 42nd Street

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I haven’t been blogging that long, but one of the principles I’ve learned is to cherish those persons who are kind enough to make comments on my posts.  I realize now that I was less than thorough in my response to plautus .  The post was one in which I expressed sympathy for the taxing authorities of Highlands Country, Florida who had to cope with people who thought they could remove their property from the tax rolls either by “land patents” or some sort of trust nonsense.  Here is his comment:

Anytime there is a major development that might affect my clients, I’m all over it.  And plautus is talking about a statute here, so I practically begged him for a citation.  I haven’t heard back from him.  The bowdlerized portion of the comment above, which I let stand in the original comment in the interest of free speech, I had to beg off on.  It refers to an activity that according to research, the overwhelming majority of human beings engage in at some time in their lives.  In the 19th century it was thought to cause insanity.  In modern times, some believe it is conducive to mental health.  Go figure.  I believe that there are ampleweb resources to aid in the activity and that the Forbes contributor guidelines prevented me from being of any further assistance.  By the way, I recognize that plautus might have been making a figurative observation about my blog.  The school of tax analysis that he appears to espouse though often relies on misplaced literalism.

My self appointed role is to bring out into the sunshine authoritative tax information, of interest, that while relatively easy to access, is, in effect, hidden in plain sight, because it is combined with a large body of unspeakably dull and opaque material.  It turns out that there is in fact authoritative tax material that touches onplautus’s other passion besides crackpot legal theories.  I generally stick with material no more than a year old, usually much less, but in the interest of thoroughness, I am going back to the mid-nineties to discuss 303 WEST 42ND STREET ENTERPRISES INC. v. IRS.  (Let’s call it 303).

303 is an employee classification case.  It is a little unusual.  Usually the case is about whether people are employees or independent contractors.  That terminology is so deeply entrenched that a primitive accounting system will often have an expense account named “Independent Contractors” or “Contract Labor”, where the payments are recorded to the employees that the employer is electing not to so classify.  I’m sure that is a great convenience to examiners.  In 303, though it was not employee versus independent contractor.  It was employee versus tenant.  According to the company the persons in question were not employees.  They were tenants.  The tenants were renting booths.  The facts were very similar to that in the recent Mayfield Therapy case, which was a taxpayer victory.  The various nail technicians, cosmetologists and massage therapists that rented booths at the center were recognized by the court as being tenants not employees.

The activity at 303 was a little different.  The booths had two compartments.  They were divided by a window.  The window was covered.  Insertion of tokens, that were purchased at the establishment,  somehow removed the covering.  Their was a phone that allowed conversation between the tenant and the customer.  There was a slot that allowed the customer to transfer additional funds to the tenant.  The relationship between those two was that of audience and performer.  The arrangement allowed clients like plautus to experience the semblance of female companionship while indulging their private passions. The tenant/performers received a percentage of the gross revenue from the sale of tokens used in their booth and the entire amount of cash compensation that went into the slot.  In the discussion of the case it was noted that the interest of the tenant and the landlord were not perfectly aligned.  The landlord would benefit from lengthy visits regardless of the tip amount, whereas if tips were good the tenant would be well served by high turnover.

Close study of 303 (taxpayer loss) and Mayfield Therapy (taxpayer win) would, I think, indicate that the courts have shifted some in their attitude toward booth rental.  It is also possible that the Court may have been prejudiced by the nature of the activity at 303.  This would not have been proper.  The tax issue should not have turned on whether the tenant was polishing the customers nails or cheering while he polished his own knob.

West 42nd Street Now and then

303 West 42nd St, unless I messed up on googlemaps is now a drug store.  It is across 42nd street from the Port Authority Bus Terminal (Need I mention which city we are talking about here?  It is The City).  Astoundlingly I must have been near there very many times as I commuted to high school and summer work in the financial district.  Of course there is underground access to the subway from the bus terminal and a 16 year old boy taught to ask for help avoiding all sins, but especially those against the sixth and ninth commandments, which includes impure thoughts, would have no reason to wander around 42nd between 7th and 8th  before it was converted into an extension of Disneyworld.  So who knew there was such a thing going on there ?

Forbes allows its contributors immense powers over comments, so I think it would be good for me to announce a formal policy.  I will rarely delete comments other than obvious spam.  I will even leave obvious spam if it is amusing.  I will be generous in calling out comments particularly if you strongly disagree with me.  Finally if like plautus and charliemurf you choose to mock me, you will be called out and possibly mentioned in a future post.  Naturally this policy is subject to change at my whim.