Las Vegas Taxi Driver

Simple, in my opinion, they want drivers to think the expanded IRS 1099 reporting rules still exist, they don’t.

By keeping this 1099 Myth going the Strip Clubs can simply play the door fee refund game with taxi and limo drivers. It costs the clubs nothing when they simply collect a normal $20 cover charge from individual patrons and then kick that money back to drivers. They get FREE advertising out of the deal. Before the New, and now repealed 1099 reporting rules, some clubs were willing to pay as high as $100 advertising bounties. The base referrals were around $40 not long ago from almost all the clubs.

Here’s an article about what the New Law was about: 1099 Tax Rule May Bring Big Pain to Small Business

Here’s an article about the repeal of the recording requirements: Repealing the 1099 Reporting Requirement: A Big Win for Small Business

So in a nutshell since the IRS is not going to track all this supposed underground economic activity after all, this change to and now repeal of the 1099 laws is like it never happened, or was it?

If one operates a Strip Club, one liked this change to 1099. So much so keeping the illusion going it still exists saves Clubs millions in money they do not have to pay out for advertising like before. Instead they simply collect a cover charge and kick that money back to taxi and limo drivers as their advertising referral fee. Costs the Club zero dollars. The club also gets the benefit of happier door employees who are tipped out by these same drivers when they are kicked back the cover charge.

Paying Taxi and Limo drivers goodwill referrals has been the bane of local officials for decades. Referrals, Commissions, Gifts, Incentives, are common place in other lines of work and serve a very useful function. Why paying a cabbie a simple $40 bounty for some good pr inside their taxi is a bad thing has always confused me. Most of these kickbacks amount to 10% or less of what the customer value to the club is BTW. I guess one can chock it up to the general hatred the public has for cabbies in general. They must assume we are all crooks out to take advantage of them. All cabbies are foreigners, likely Terrorist sympathizers, and do not deserve the fruits of this Free Country. The more likely reason is people do not think a dumb cabbie worthy of anything beyond a menial existence and paying these losers what is good money on my account, my sexual account, is simply wrong, UnAmerican.

The Clubs have even hit on the fact it is illegal for a cabbie to supposedly “divert” a ride from the place a customer requests to one which pays a cabbie. Course this was written as a law by these same Clubs I suspect. A law which is so ambiguous to be next to impossible to enforce and is designed simply to chill commerce. Again another effort to get advertising for free by these clubs.

Not paying proper referrals fees is a bonanza for the Strip Clubs of course. These 1099 changes also solved the legal issues for local Government. For decades the Clubs have pressured local authorities to do something against the horde of extortionist cabbies who are bleeding them dry thru the demand for kickbacks. The new 1099 reporting rules must have appeared to be a godsend.

The clubs for a longtime even claimed cabbie kickbacks were illegal. They darted around all manner of laws including the fact because they served Alcohol, they risked their Liquor License by paying out cabbies. The goal all along has to have these pay outs viewed by the public as wrong and illegal. To make themselves look like the customer’s friend and the cabbie the evil doer who is out to cheat you. Never mind these Clubs charge $20 for a drink and make millions ever year providing little more than a building. Remember the dancers are all independent contractors as well and pay to dance at these clubs.

On June 3, 2011 a Federal Judge ruled paying cabbies referrals is NOT illegal, and perfectly reasonable business practice. Here’s a an article about this ruling: U.S. judge dismisses claims in strip club-taxi driver lawsuit and another: Vegas judge gives OK to cab drivers taking passengers to strip clubs

The trouble with all this has to do with the fact the Strip Clubs and Clark County are still playing along as if tracking of payouts is required. The Clubs do it for obvious reasons, the County plays along because it relieves them of any enforcement work resting upon a pile of laws which are now clearly in serious need of repeal. If tipping out a cabbie is no longer considered illegal (never really was BTW), why even bother at all?

The issue now is one lost in the tax code. One where tracking is done in ways to chill competitors from paying drivers proper referrals. Claims of frivolous advertising deductions could be real concerns now. By tracking payouts, one has figures one can use to claim someone is being frivolous. The end game is the fact no advertising money is actually being paid out by these Clubs. Simply recycling door fees is not an advertising cost to a club. Is this the way the IRS sees it? Is this the way the clubs are reporting it to IRS? Who knows publically? Well you can’t and that is no accident either.

So there’s one cabbies opinion on why the Strip Clubs don’t pay anymore.

It should also be duly noted I, the Unknown Cabbie was guilty of diversion just last night. I had a couple who wanted to go to a club I know does not allow couples in. So instead of wasting my customers time and risking a referral fee if they simply didn’t want to go after all, I suggested we go to a club I know allows for admission of men and women. This club BTW was not the only choice but it was the one “I like” to deal with. So in effect I “diverted” this ride. Who was harmed I have no idea but there it is. I guess the loser in this was a similar club miles further away who was not in the running from this extortionist cabbie. Course their loss was inside a the greater crime of me diverting these nice people from Columbia in the first place.