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Originally Posted by Robbie
You were paying the strippers? I haven't heard of that in years. Last girls I saw get paid by the club were my 2nd and 3rd wives (they were both feature dancers and traveled the world)
Other than that every club I know of in the U.S. uses the "tip out" scam to force the girls to pay to work. Here in Vegas it's currently $75 a night UP FRONT that a stripper has to pay out to the house mom the minute they walk in the door before they are allowed on the floor.
I have never heard of the IRS coming after strippers (and I was married to 2 and lived with 2 that were all BIG money makers) because it's a cash business. I guess there are exceptions such as you are describing but I'm not sure how the IRS even knew those girls existed or were working at your club.
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No we didn't actually pay them, hence the independent contractor status. Our clubs were affiliated with Deja Vu, and one was a Deja Vu Club (in Port Huron, Michigan), so we also operated on the girls paying what we would call "dancer rent" for each shift, which could be as low as $25 depending on the club location. Would would also "fine" them from $50 on up if they missed their shift.
As for the IRS finding out about the girls, there are so many ways it could happen. Even though we classified them as independent contractors a lot of the girls still put the club location as their employer when applying for credit, apartments, and so on. Some girls come into the business trying to do it the right way, and will initially report some type of income to the IRS from dancing, even though they were way under reporting. Then after a year or so they just quit filing taxes completely, even though at this point they are in the system as a dancer and are still living a high dollar lifestyle with tons of bills and expenses.
The most common way though was child and spousal support. So many of these girls had kids with or were married to deadbeats, so when their marriages split they actually ended up having to pay spousal support, or if they were married to a decent working guy the guy ended up with custody of the kids because the girl was a wreck. They almost always fell behind on their payments for whatever reason, the club was listed as their employer even though they are independent contractors, and pretty soon the IRS is sniffing around.
You are right in that we never kept track of the money they were paid and never sent a 1099 to the IRS for a dancer, but if a girl is not smart she can most definitely end up in the system if she has an ex that knows how much she made and is spiteful...