Sales tax changes result in dance studio owner being hit with thousands in back taxes

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LEE'S SUMMIT, Mo. -- When parents send children to dance class, time spent there should be taxing, not taxed. But the Missouri Department of Revenue is stepping up enforcement of sales tax on places of: amusement, entertainment or recreation. Dance practice might now fall under that category.

For years, a sales tax was never collected at Miss Dianna’s Dance Studio because it was considered a place of education. The state charges a sales tax on places of recreation and entertainment and now that might include her studio.

"We've had to help a few of our families out. The struggle of paying for dance lessons is a little harder now," said Dianna Pfaff, the owner.

Parents might have to shell out more money. For 40 years, Pfaff never required parents to pay a sales tax because it’s a place of education. But that changed a year ago.  The Missouri Department of Revenue audited her small business and slapped her with  more than $73,000 worth of back taxes.

But Pfaff didn’t know she was supposed to be collecting taxes. Only places of recreation and entertainment are taxed. Within the last year, the state considered Pffaff’s studio one of those places.

"You can't raise somebody's taxes by changing a definition," said Missouri State Senator Ryan Silvey (R-17).

Silvey helped propose a bill that would better define places of education that would include dance. But Missouri Governor Jay Nixon vetoed it in June.

"I think that he's finding all ways to find revenue and by forcing people to pay taxes by reinterpreting tax code. I think that's a way he could get extra money," he said.

There are hopes to override the veto in September.

"I don't believe in what's going on here and I have to fight for my families, and all the families who have children that take dance in the state of Missouri," said Pfaff.

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