The recently formed Maryland Theater Association (MTA) is working to ease the financial burdens of non-profit theaters caused by the state's admissions and amusement tax.
Studies made by MTA show that the tax is a significant burden on many of Maryland's community theater groups, said Richard S. Baldau, MTA's newly elected president.
MTA is offering information on the law and urging all theater groups to become familiar with its terms, including the provisions for exemption, he said.
The Maryland Admissions and Amusement Tax, enacted in July 1972, gave counties and municipalities the right to levy a tax of up to 10 per cent on the admission charged for a performance. The rates have varied widely around the state, ranging from a low of one-half per cent in Harford County to 7 per cent in Montgomery County to, until recently, 10 per cent in Prince George's County.
"Ten per cent off the top of door receipts is a walloping sock to non-profit groups," said Flo Ormand, chairman of the Committee to Abolish Community Theater Taxes (ACT II), in Prince George's County. "It doesn't make any difference if a production makes or loses money, the 10 per cent comes off the top of ticket sales. Even in business there are tax loopholes to compensate for losses and keep the business going. We don't have this advantage.
Due largely to the efforts of ACT II, a citizens' advocacy group, Prince George's County recently became the first county in Maryland to take advantage of a 1976 amendment to the admissions tax law. The amendment made it possible for any county or municipality to exempt non-profit performing arts groups from payment of the admissions and amusement tax.
Such an exemption was passed by the County Council of Prince George's County in October and signed by County Executive Winfield Kelly last month.
In Montgomery County, Silver Spring Stage is the primary advocate of exemption for non-profit performing arts groups. Its case is, in many respects, typical of the problems that the tax presents to community groups in the arts.
Because they are exempt from federal income tax under section 501 (c) (3) of the Internal Revenue Code, many non-profit performing arts groups have assumed they were also exempt from the admissions tax. Gradually, state tax collectors are catching up with these groups and presenting them with sizeable bills for tax monies due.
Silver Springs Stage had not paid an admissions tax since receiving its federal income tax exemption in May 1974. In October of this year it received a notice from the Maryland Admissions and Amusement Tax Division demanding payment of taxes for the past three years. The retroactive estimate was $4,000 plus $1,000 penalty. After discussions between Levine and tax division officials, the assessment was set at $3,100 including penalty, Levine said.
Sidney Levine, chairman of the board of trustees for Silver Spring Stage, has appealed to Montgomery County Executive James Gleason and Council President John Menke for an exemption under the 1976 amendment.
"Without an exemption I'm not sure what we'll do," said Levine. "We simply don't have the money. Any profits we make on a performance go right back into the theater. We put on 12 plays a year, all with volunteers from the community, including actors, directors and stagehands."
Levine pointed to what he sees as an inequity in the provisions of the admissions tax:
"In contrast to our community-run and community-participation non-profit little theater, such profit-making (non-community run) operations as bowling alleys, boxing, wrestling and bingo are expressly exempt from having to pay such a tax."
According to Levine, Silver Spring Stage will be forced to consider raising its ticket prices if it has to pay the tax.
"We have striven to hold down our prices. With the costs of 'professional' theater becoming beyond the reach of most people we of the community theaters are the only alternative for live theater," he said.
In Richard Baldau's opinion, non-profit performing arts groups like Silver Spring Stage were inadvertently caught in the law. As evidence he points to the law's pattern of exemptions which include other non-profit grous such as educational religious institutions.
As far as Montgomery County is concerned, Baldau estimated that the income from non-profit theater groups is, at the very most, $35,000 to $40,000, a relatively small proportion of the overall admissions tax revenue. Montgomery County's total income for fiscal year 1977 from the admissions tax was $901.842, according to figures from the county's division of revenue.
Though a small part of the county's total income, the tax payment could be critical to the individual community groups, said Baldau.
"The amount of money paid by some groups could mean the difference between survival and closing the doors," he said.
Besides its activities in regard to the admissions tax, MTA is planning a one act play festival March 31, April 1 and 2 at the Prince George's Publick Play house. It also hopes to offer an information clearinghouse and legal and technical assistance to its members.
For information about MTA write Richard S. Baldau, 8 Delfrod Ave., Silver Spring 20904.