West Valley businesses surprised with 'out of the blue' tax bill

PEORIA, Ariz. - What would you do if you get a big tax bill from out of the blue?

That is what dozens of businesses in one West Valley city are currently facing.

Three types of businesses are feeling the impact: dance studios, gymnastic studios, and martial art studios. These businesses were classified as education entities, but they are now classified as amusement.

One of the businesses affected is Marilyn's Academy of Dance. Owner Marilyn Burns said she received a letter from the city in September, stating that her business owes an ‘amusement tax,’ as well as six years in back taxes and penalties.

"Every year, we renew our business license. That’s it," said Burns. "Never a letter, never any notification."

In 2005, the City of Peoria passed the so-called "Option H" Amusement Tax, and set it at 2.8%. City officials said the situation started with a random audit, and then spread by word of mouth from there.

City officials insist that each business is responsible for their own tax matters, but workshops and online information were offered. In addition, there's also an option for payment plans, as well as an option for businesses affected to protest the tax at the state level.

Officials with the Peoria Chamber of Commerce, however, say city officials are out of line, when it comes to this issue.

"This is something that’s under the radar for so long, that it's just a surprise now that the city is forcing this after so many years," said Rhonda Carlson.

Burns says she is teaming up with other studios, hoping to have their entities re-classified under education, and sidestep any back taxes.

Should those efforts fail, Burns may have to hang up the dance shoes for good.

"It’ll put every martial arts, gymnastics and dance studio out of business," said Burns.