IAHA Drops the BallBy Leonard PickelIn the year before the creation of Haunted Attraction Magazine, (1995) my signature Haunt Mayhem Manor a summer seasonal operation in Myrtle Beach, SC. We were doing everything our account told us to do to designate our workers as "contract labor." Then at the end of the season, as the attraction closed for the season, one of our actors filed for unemployment, something that was clearly stated in the contract that he signed, he was not eligible for as a general contractor. This caused the labor commission of South Carolina to make a determination as to whether or not my contract labor actors were actually employees. If an actor of a Haunted Attraction is an employee then the employee and the employer are required to pay FICA, have workman’s comp, pay social security and various other taxes. If the actor could be considered contract labor, then NO taxes are paid by the Haunt and the money paid out is only reported to the IRS (by the Haunt) after said actor reached $600 of income. To make a long story short, I lost that battle and had to pay BOTH the employers and the employees part of the back taxes they deemed due. That was the last time that I tried to designate my workers as anything but employees. Fresh in my mind, the very first issue of Haunted Attraction had an article on this very issue. Basically, if you set the schedule for your actors, provide them with tools needed they are employees. If the actors does not have a company that provided this same service for other clients, or does not risk getting losing money for failing to perform, then that person is an employee, and cannot be considered contract labor. Fast forward to 2005. A Haunted Attraction in the Detroit area is audited by the IRS. As is typical with these types of random audits, the IRS was not able to find any accounting out of the ordinary. Now trying to justify the audit, the IRS looks closer at the way the attraction is paying the actors as contract labor. The audited attraction was doing a much better job of adhering to the description of contract labor than I was in 1995. In their contract, the actor chose which days they worked as well as which rooms they worked, to satisfy the scheduling criteria. The actors were also part of an acting troupe, that did provide actors for other attractions, to satisfy the requirements that the actor have a company. But the decision was the same. The IRS ruled that a haunted attraction actor does not fall under the description of contract labor, AND that this will be the president set for how the entire industry will be handled in the future. This decision, if allowed to stand could require anyone who is now calling actors contract labor to pay the FULL FICA, and Social Security for each actor used in the past several years of operation. It could cost the Haunt industry a million dollars and could break the back of many smaller Haunted Attractions across the country that are already working on a very small profit margin. Fortunately, the audited Haunt owner realizes the potential damage to the industry this decision could reek, and while it will not cost this Haunt any money this year, the owner has agreed to spend their own money to fight this battle for the whole industry, and appeal the IRS decision. This appeal will determine once and for all, if an actor of a Haunted Attraction is an employee OR if that actor can be considered contract labor. The IRS has agreed to hear the appeal and is asking for a "business standard" for the Haunt industry endorsed by the "industry association" that simply states "Seasonal Haunted Attraction workers are considered Contract Labor by the haunted attraction industry." This would allow ALL attraction owners now and in the future to designate actors and other haunt workers as contract labor, saving thousands of dollars for Haunt owners everywhere. We have one chance at this point in history to tell the IRS how we as an industry want the part time person working in a haunted house to be classified, but the IRS issued a deadline of May 31st, 2005 for any additional evidence for reversal. As a member of the IAHA, the audited Haunt owner called the sitting president of the IAHA, <a href="http://mailto:darkrides@sbcglobal.net">Larry Kirchner</a>, and left a message asking to open a dialog to discuss this situation with the association board of directors. That was almost 3 weeks ago. As of today, this phone call has not been returned. Mr. Kirchner is noted by others as saying that this is an issue between said attraction and the IRS. Mr. Kirchner he pays his actors as if they were employees already and therefore may not care about the situation affecting so many other attractions. The present Vice President of the IAHA , <a href="http://mailto:blackknight@hauntedcastle.com">Randy Young</a>, was then contacted as well, but his Haunt is a charity attraction, and Randy either does not understand the effect this will have on others, or does not care because it will not effect what he is doing. In fact, only four of the present board members have ever owned or operated a Haunted attraction and two of those use volunteer actors. The last hope was the one last director who does use paid actors, <a href="http://MAILto:tei@nwonline.net">Bob Turner</a>. Finnaly it looked like something might get done. Mr. Turner requested a writen statement from the audited Haunt, and needed it in 2 hours, so he coule present it to the board. The Haunt owner had to cancel meetings and rearrange schedules, but got the statement to Mr. Turner in the time required. Days pass, and not a word from the IAHA. So the owner contacts the IAHA legal counsel, Pete Karlowicz, who cannot believe that the board has not acted on this situation, which he sees the potential benefit of the appeal. Mr. Karlowicz suggests contacting the IAHA secretary, <a href="http://mailto:juliepawlowicz@mac.com">Julie Pawlowicz</a>, to see if the matter was recorded on the meeting minutes. The matter had been discussed briefly during the meeting, which was mostly planning for the IAHA social that will be offered at Mr. Kirchner's home, but no decision was made! With the IRS deadline looming, the audited Haunt asks for and is granted a two week extension. A follow up call to Mr. Turner got an apology from Mr. Turner, describing the issue as problematic because Mr. Kirchner had enough board members on his side, as to keep the IAHA from taking action on the issue. He did request that a formal letter from the audited Haunt's accounting firm be provided for another board meeting Wednesday June 8th. But time is running out. For many years, Mr. Kirchner and other then detractors of the IAHA, railed against the young organization, claiming that there was not need for a Haunt industry Association; and that the IAHA was positioning itself as the voice for the industry. A position that Mr. Kirchner deemed unworthy for a group of (at the time) 500 members. Scandal and lack of accounting accountability in the last year was decreased the IAHA's membership to less than half of it's past greatness, and with the associations biggest critic now seated as president, the industry breathlessly awaits to see how Mr. Kirchner can mold the IAHA into his own personal vision for Haunting. But if there ever was a reason to have an industry association, the Internal Revenue service, asking "What the industry association standard for classification of actors is," is a darn good one. And with the prime opportunity to finally show the industry that the IAHA can get something done; their inaction on the issue could drastically damage the very industry that the IAHA was created to support. Either way, the industry is watching and you will be judged by your next move. Leonard Pickel is owner and ediotr of Haunted Attraction Magazine. He can be reached at info@hauntcon.com.
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